Is It Time for Spain? Unpacking the Coliving Opportunity

The Spanish real estate market is currently defined by a stark paradox. On one side, there is a surging demand for accommodation driven by shifting demographics and an influx of international talent, on the other, a rigid and sluggish planning system that has left cities wanting for new residential supply. For investors and operators observing Southern Europe, the tension between these two forces has created a unique window of opportunity. It is no longer merely a question of whether the Spanish lifestyle appeals to nomadic professionals, but whether the built environment can evolve fast enough to house them.

This structural imbalance was a central theme at Coliving Conference 2025 in Barcelona, Spain, where panelists dissected the maturity of the Spanish market. While the allure of Spain’s climate and culture remains a powerful magnet, the conversation has shifted from lifestyle to logistics, planning frameworks, and the hard economics of asset transformation. 

‍Is the Market Driven by Lifestyle or Structural Necessity?

To understand the trajectory of coliving in Spain, one must first look at the land itself. The scarcity of available residential plots is a result of systemic planning constraints. According to Carlos Muriel, Head of Europe at Buckley Gray Yeoman (BGY), the process of transforming land for residential use is notoriously slow, often taking between 10 - 12 years to finalise. This bureaucratic lag has created a supply vacuum that traditional developers cannot easily fill. Once designated residential land is built out, the market must wait for municipalities to release new supply, a process that trails woefully behind the demographic reality.

This is where coliving has found its economic foothold. By activating assets on land not strictly designated for traditional residential use, such as office blocks or institutional sites, operators are unlocking value in locations that would otherwise remain dormant. Muriel notes that for investors, the ability to repurpose these "tertiary zoning" sites allows for entry into prime city centre locations at adjusted land values, creating a viable margin that traditional residential projects often lack.

However, the demand side of the equation is equally pressured by economics. While the "sun and sea" narrative persists, affordability has become the primary driver for residents. Davide Ravalli, Chief Growth Officer & GM Iberia at Joivy, suggests that the sector is increasingly functioning as a solution to an affordability crisis that spans the continent. With overextension of traditional rental markets, the efficiency of shared living models is a financial necessity for young professionals.

Can Regulatory Frameworks Keep Pace with Capital Inflows?

The maturation of the Spanish market is inextricably linked to the clarity of its rules. Unlike the United Kingdom, where planning often involves a speculative, year-long negotiation to justify a scheme’s density, Spain offers an interesting mix of rigidity and clarity, with the rules being extensive, but documented clearly. Muriel observes that for international capital, particularly investors accustomed to the fluid, defensive planning battles of London, the Spanish system can be surprisingly reassuring.

However, the landscape is fragmented. Authority over land qualification resides with individual municipalities rather than regional or national governmental bodies, creating a messy patchwork of regulations. Madrid is currently viewed as a pioneer, having established specific regulations that provide a legal container for coliving, with cities like Malaga following suit. 

The danger of this grey area is the conflation of coliving with short-term tourist rentals, a sector facing increasing hostility across Europe. Ravalli points out that without a distinct asset category - similar to the advances seen in France or the specific classes in the United Kingdom - coliving risks being caught in the regulatory crossfire aimed at holiday apartments. The industry’s stability relies on lobbying for this differentiation, ensuring that long-term shared living is recognised as a residential solution rather than a touristic commodity.

The Divergence of Scale & Strategy

As the market deepens, a clear divergence in operational strategy is emerging, illustrating that there is no single "Spanish model" for coliving. On one end of the spectrum lies the granular, community-first approach exemplified by operators like weVLC in Valencia. Andres Nieto, Co-Founder at weVLC, describes a strategy focused on retrofitting the existing city rather than starting from scratch. Operating in a city largely constructed in the 1960s, weVLC acquires and renovates individual apartments and clusters, initiating around 15 new projects this year alone.

This approach prioritises the regeneration of existing stock over massive ground-up developments, allowing for a faster - albeit more operationally complex - entry into the market. It also requires a disciplined adherence to brand values over pure growth. Nieto reveals that his firm recently turned down a € 10 million investment offer because the capital partners did not align with the company’s principles or vision for the product. This restraint highlights a growing sophistication among local operators who are wary of investments that demand scale at the expense of product integrity.

In contrast, the market is also witnessing the arrival of institutional-grade Flex Living, a hybrid model designed for scale. Joivy, which manages a massive portfolio of 15.000 units across Europe, is currently developing a 300-unit Flex Living scheme in Madrid on service-designated land. This emerging asset class represents the industrialisation of the sector, catering to a transient but recurring demographic. Ravalli notes that while contracts in these buildings are often capped at one year due to regulations, tenants frequently renew for three or four years, effectively treating these flexible assets as permanent homes. This high retention rate validates the Flex Living model as a stable, long-term yield generator.

Operational Realities & the Heritage Challenge

Regardless of the business model - whether scattered units in Valencia or 300-key buildings in Madrid - every operator in Spain eventually collides with the reality of Patrimonio Nacional, which is the Spanish state agency managing sites formerly owned by the Crown. The preservation of Spain’s historical architecture is strictly enforced, often leading to clashes between modern living standards and centuries-old restrictions.

Joivy’s experience with a convent conversion on Calle Atocha in Madrid serves as a cautionary tale for the industry. The project, funded by United Kingdom capital and subject to a 15-year master lease, was stalled for over a year due to a dispute over air conditioning. The building, a protected historical asset previously occupied by monks, had undergone unauthorised modifications centuries ago - extra space created by the monks in the roof. When the operators applied for an air conditioning license, municipal inspectors used drones to survey the roof, identified the historical "illegality", and demanded the building be returned to its original state before granting modern permits.

The result was a year of lost revenue and the operational nightmare of running a premium asset in Madrid’s scorching summer without climate control. This underscores a critical operational truth in Spain - technical due diligence must go beyond structural surveys to include a deep archaeological understanding of the asset. A license to operate is contingent not just on safety, but on historical fidelity.

Embracing Spain’s Coliving Moment

The narrative is shifting with coliving in Spain evolving from a premium hospitality product into a fundamental component of the housing ladder. Now a professionalised landscape of heritage conversions, ground-up Flex Living developments, and granular regeneration projects. The market is increasingly defined by a dichotomy - the massive, sluggish machinery of urban planning versus the agile, capital-backed urgency of operators.

For those looking to enter or expand in this region, the path forward requires operators building substantial buffers into their timelines for regulatory and heritage compliance. The potential yields are high, but they are rarely quick. Second, the alignment between investor and operator is paramount. The refusal of significant funding by smaller operators suggests that the market is becoming discerning; - capital is abundant, but strategic alignment is rare. Operators are prioritising sustainable growth over aggressive expansion that compromises the user experience.

Finally, the industry must continue to push for the codification of Flex Living and Coliving as distinct legal categories. The success of Madrid’s regulatory experiments offers a blueprint for the rest of the country. If other municipalities can replicate this clarity, disconnecting coliving from the debates surrounding tourism, Spain has the potential to become Europe’s most dynamic shared living market. With the undeniable demand and the ready capital, the future belongs to those who can master the intricate dance of Spanish bureaucracy.