Several players involved in BTR (‘build to rent’) discussed the challenges facing the sector this Tuesday during a talk at the Rebuild fair. Rosa Gallego, director of operations at Q-Living, and Carlos Rodríguez-Bailón, CEO of Stay by Kronos, have appealed to architects and urged them to design functional projects that can be built. “We have to go hand in hand with architects and have them understand that we need simple, functional and economical projects,” said Gallego in one of his speeches. “First of all, I would like to say that I agree with Rosa’s request to the architects,” added Rodríguez-Bailón.
Irene Trujillo, country director of Dovevivo, and Pablo Méndez, investment director of Culmia, also took part in the meeting. The former put the emphasis on the end client when it comes to guiding and planning BTR projects. “The main thing in this case is to think about the tenant and you have to put him at the center. In this scenario there are three types of ‘build to rent”. The first is the traditional rental of large apartments with two or three bedrooms and where utilities are not usually included. The second is what the Anglo-Saxons call servicer apartment, i.e., rentals where not only the utilities are included in the billing (rent), but also other amennities such as gyms, coworking… And finally there is a third type called ‘cohousing’ or ‘coliving’,” explained Trujillo.
In the second block of these is where the Stay by Kronos bet is framed. “Design plays a fundamental role. Not everything is good enough for us and the land must have housing density, sense, profitability, although I agree with Irene that the first thing is the tenant. What we have done is to create a house in a warehouse where we have tested all our materials. Stay fuses design and architecture with a very high component of sustainability. In addition, we are betting on a flat-rate supply”, said Rodríguez-Bailón.
For his part, Méndez brought to the meeting the experience of a developer of the size of Culmia in the ‘build to rent’ segment thanks to its participation in the Plan Vive. “The Community of Madrid has understood that this is a business and that it must be profitable. We have three lots of the Plan Vive and we are going to project 100% industrialized housing. Our margins are minimal, but the regional administration has understood that there must be that margin, that profitability. “We have our own financing, but it will be very difficult in the future to build affordable housing without subsidies or the support of ‘next generation’ funds, for example,” she said.
“Demand in the BTR is guaranteed. The market is going to tend to rent because of the country’s economy. In addition, Spain has a great advantage over other competing countries because it did not have a market created and it is a great opportunity for investors looking to create this market. What is still a problem is the land and the regulation because it needs to be consolidated,” said Culmia’s investment director.
Gallego, in addition to requesting simplicity from architects when designing BTR housing, also praised the figure of the tenant, as did Trujillo. “Our first partner is the tenant because we have to understand that not in all locations there is a critical mass of tenants with the capacity to absorb a given offer. In this sense, developers have to understand what ‘build to rent’ is and respect deadlines. I prefer a developer to tell me that it is going to take 40 months to complete a project than to tell me that it is going to take 36 months and then finish it in 40, because this is a product that works in terms of profitability and a month of no rents because it has not been completed on time has a great impact on investors,” she said.
“For its part, the construction company must be clear that it signs a turnkey contract with a developer who in turn signs a turnkey contract with us (property management) and therefore the project in execution cannot have major variations with respect to the initial design. And finally, we have to take into account the Administration, which is the ‘happiest’ in all this because it already takes 25% VAT from the developer phase“, concluded Q-Living’s operations director.
