Rents in the European purpose-built student accommodation (PBSA) sector are rising steadily, driven by strong growth in Central and Eastern Europe (CEE), new research by rented residential specialist Bonard reveals.
The research found that on average, rents increased by 9.7% (970 BPS) in the academic year September 2021-September 2022, reflecting 'some particularly significant spikes' in CEE.
The report is based on an analysis of rents charged by 172 private PBSA providers across Europe as well as one-on-one discussions with industry players.
In CEE, growth rates averaging 17.4% (1740 BPS) were recorded over the period, dwarfing the 3.1% (or 310 BPS) rise seen in Western Europe.
Lithuania experienced the sharpest rent increase: 44%, followed by Latvia (19.6%), Poland and the Czech Republic (13.6% and 13.5%, respectively). By contrast, Portugal and Germany showed only a modest 1.2% and 1.9% (120 and 190 BPS) increase.
Bonard attributed the overall growth trend to high occupancy rates across the PBSA sector and ongoing strong demand, amid an environment of rising inflation and interest rates. In addition, new, higher-quality PBSA products are entering the market, boosting the average rent value, it said.
‘In this unfavourable economic climate, fewer people will be capable of buying a property. At the same time, increased economic migration is likely,’ commented Julia Momotiuk, Bonard’s head of rented residential. ‘Both these trends will increase demand for private rental properties from the general public, pushing more students out of the private rental market and into PBSA.’
At the same time, rising inflation and interest rates are creating substantial challenges for the sector, notably in relation to staff, utility, maintenance and construction costs. Higher interest rates are also making debt obligations more challenging for some developers to sustain.
‘Our research, and the feedback we gathered from key players in the industry, shows that high student demand will allow private PBSA providers to continue increasing rents. This will help offset the effect of growing costs,’ Momotiuk said.
