The Build to Rent model is consolidating its position in a changing real estate market as one of the most attractive strategies for investors and developers seeking long-term stability. Rental demand is growing and supply remains insufficient. This system offers an efficient and secure solution for these new demands – including tourism rentals and month-to-month rentals for digital nomads – without neglecting the challenge of guaranteeing access to stable housing for residents.
Less focused on the returns offered by short-stay rental formulas like tourism or month-to-month, Build to Rent centers itself on traditional long-term rental as a structural response to market trends. Factors like young people’s impediments to buying a home, labor mobility and changing lifestyles have made renting an increasingly popular option. However, in countries like Spain, the supply has not met this growing need. In the Build to Rent model, investors buy developments with the intention of renting them on a long-term basis, whether through conventional rental schemes or as housing that offers complementary services and professional management.
Keys to the growth of Build to Rent in Spain
Though in recent years much rental investment in Spain has focused on holiday or temporary rentals with very high returns, these two formulas are currently being regulated, in line with citizen demand, to counteract gentrification and moderate rising prices.
In areas such as Catalonia, for example, holiday rental licenses have been frozen since 2014. Last year, the Barcelona City Council announced that by 2029, this type of rental will be outright prohibited, and the regional government has hinted at forthcoming regulations on month-to-month rentals as well. This is in addition to the regulation of rental prices that has been in operation since March 2024 in Catalonia and particularly stressed areas such as Barcelona. These limitations, though cause for concern about the profitability of real estate assets, in fact only partially affect traditional long-term leasing. They limit prices, but the market’s interest in accessing these assets remains strong.
The way in which real estate investment is modeled and managed is changing rapidly. The Build to Rent model remains an efficient response to the challenges of the sector because it offers high occupancy rates and lower tenant turnover, and the moderation of interest rates after a period of high ones is improving mortgage yields. In addition, there is public awareness of the need to generate affordable rental housing. This is in turn creating development opportunities on strategically located land and in the transformation of real estate stock (such as the conversion of offices that are not being used into housing).
A consolidated trend in Europe
The Build to Rent model has proven its strength in markets such as the United Kingdom and Germany, where it’s already a stable and profitable option in the real estate sector. In these countries, this system has achieved significant penetration thanks to the professionalization of the sector, the backing of large investment funds and institutional support for rental culture.
In Spain the outlook is positive as well, though Build to Rent is still in a growth phase. An influx of foreign capital, combined with a change in the perception of renting as a viable alternative to owning, is driving new developments and consolidating interest. The shortage of rental housing supply and growing demand make it an investment opportunity with great potential for expansion. According to the Atlas Real Estate Analytics report, the absorption of rental housing stock in cities like Madrid, Barcelona, Valencia and Málaga has been remarkable, which is evidence of the market’s interest and the opportunity for new developments. As the sector evolves, more institutional players and developers are expected to adapt their strategies to take advantage of this growing niche.
The capacity of Built to Rent to offer housing solutions adapted to the new market dynamics, together with its attractiveness for investors, positions it as a clear opportunity for expansion. Investing in this model not only responds to a growing housing need, but also creates a stable real estate innovation strategy for the future.
