Wall Street Mega-Landlords Piled into Spain’s Rental Property Boom, and Now it Hits a Wall?

Blackstone Group, Cerberus Capital and others face a little problem.

Demand for rental housing in Spain may have hit a wall, so to speak, while supply remains more or less unchanged, according to a new study by the real estate agency Fotocasa: Last year, 14% of Spanish adults had rented or were looking to rent a new property; this year, this figure has slumped to 9%.

There doesn’t appear to have been a concurrent shift in demand to the ownership market. Demand for buying properties is more or less where it was last year, says the study. “Young workers are opting to stay at their parents’ home or to live in the flat belonging to their partners,” said Beatriz Toribio, Fotocasa’s director of research, during the report’s presentation.

The main reason is the unprecedented surge of rents in recent years. In 2017, rents rose by an average of 9%, although in some large cities, rents jumped at an even faster pace. “Over the past four years the price of rents in Madrid and Barcelona, Spain’s two biggest cities, rose by 30% and 40%, respectively,” Toribio said.

Now, both cities’ latest rental booms appear to have run their course, or are on the verge of doing so. Whither they go, the rest will follow. That could be unwelcome news for the Wall Street mega-landlords that have piled into Spain’s rental housing market in the last year. In 2017 alone global private equity funds purchased some €60 billion of real estate assets from Spanish banks — almost three times the total outlay in 2016. Many of the assets were purchased at a heavily subsidised discount

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