Build to rent

In the real estate developer sector, there is uncertainty about whether demand for first homes will remain consistent in certain markets over the next few years. Generational changes about the priority of purchasing a home and restrictions on mortgage borrowing that transcend replacement demand is leading residential developers to explore ways of collaborating with funds that specialise in investing in complete residential lettings buildings.

The big residential developers are looking to close agreements with these investors, allowing them to accelerate their business plans and increase their ROCE by commissioning large urban development land sites in prime and secondary zones. This would solve the problem of having to wait years to start new residential developments and avoid having to compete with those hoping to develop the same sites in the next three years, which would increase their ROCE and enable them to achieve their forecast returns and business plans.

The funds focusing on this opportunity are mainly a combination of managers/investors with extensive experience of designing and managing residential letting properties, together with providers of capital, usually international insurance companies with an extremely low cost of capital and very long-term (10-15 year) investment horizons.

The main barrier to realising these opportunities, known in European markets as Build to Rent (BTR) schemes, is the risk of changes in construction costs of future developments and commitments to develop portfolios of 500-1500 units.

In our experience, these agreements require two important milestones to be specified. A general agreement framework about a specific portfolio that sets out the funding methods for the developer, the specifications and other financial aspects; and specific formulas for implementing this agreement regarding buildable land, the construction project for residences specifically designed to be rented, and a fixed price for the construction costs as a result of tendering a specific project that can be immediately executed.

From the general agreement to the realisation of a project, a safety margin needs to be built in for both parties that helps to ease the untenable pressure of forcing one of the parties to fulfil its commitments regarding unviable projects due to a rise in construction costs during drawn-out periods for obtaining licences.

BTR is an extraordinary opportunity for the residential developer sector and for accelerating the production of sufficient supply of residential rental properties.

The catalyst that enables these opportunities to be developed, agreed and then effectively closed is a combination of market intelligence and flexibility in planning these agreements.


A Mikel Echavarren collaboration for ASPRIMA.

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Mikel Echavarren is CEO of Colliers International Spain. He was President and CEO of irea since its foundation in 2002 until March 2018, when irea joined Colliers International. Prior to joining irea, Mikel was a partner in the Spain and Portugal real estate corporate finance division of Arthur Andersen. 

With over 30 years of experience in the real estate sector, he is an expert in strategic planning for real estate groups and in complex mortgage debt portfolio, real estate company and property transactions. He has managed financial restructurings involving over €8,000 million worth of debt belonging to real estate, construction and services companies. 


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Alejandra Folgado

Marketing & Communications Director


As Marketing and Communications Director Alejandra is responsible for building a marketing and Comm. strategy that grows brand awareness; drives lead generation and works across business lines to support Colliers International in Spain  achieve its growth and customer acquisition goals.

She began her career at Atlas Capital Close Brothers in 2001 and joined to irea in 2006, where she was Knowledge & Organization Manager for almost 4 years. After a 5 years  of professional and personal experience in Italy, she returns to irea as Marketing & Communications Manager.

From January 2015 she has been Head of Marketing and Communications at irea until March 2018, when the spanish firm integrates in Colliers International.

Alejandra studied at Carlos III University (Madrid)  where she has a bachelor degree in Information Sciences. She holds an International Marketing and Communications Master from Polimoda Business School (Italy).

She has worked in Marketing and PR across various industries including Financing, Real Estate, Fashion and Hospitality. Alejandra  also has experience in managing and coordinating  events including conference, congress and trade fairs.

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