The housing shortage situation in Spain has become one of the main social and political problems for the country. The chronic shortage of residential real estate on the market forces many political and public figures, as well as the real estate sector itself, to look for new methods of helping and supporting the population. One of these methods has become the practice of converting empty office spaces into apartments for rent.
The market segment associated with rental houses is currently one of the fastest growing and it needs a fresh offer first of all. One of the main regions for the development of such an initiative will probably be Madrid and Barcelona. A significant part of the office real estate fund in these areas can be effectively converted into residential premises now. And over the next 20 years, up to 28,000 new residential properties can be created in these two markets alone.
The prospects of Madrid and Barcelona in this area are reflected in the report “The Office Property Telescope”, prepared by the consulting company EY. The document indicates that in the two key Spanish cities there are currently about 2.5 million square meters of office space suitable for transformation into residential premises. Madrid has about 1.8 million square meters of area or about 20,000 potential residential properties. Barcelona has 763,000 square meters or about 8,000 residential units.
The document indicates that the market is ready to part with these offices, since in the current situation they are not able to generate the required income. Thus, from January to July of this year, 40% fewer transactions were recorded in the office segment in Spain than were recorded a year earlier for the same period. In total, the value of concluded transactions amounted to 743 million euros, while only 11.4% of all investments in the market are in the office segment. At the same time, conversion projects are finding a wide response among investors who have chosen Spain in search of alternative investment assets in the local real estate market – such housing promises high returns on investment.