The European Purpose-Built Student Accommodation (PBSA) sector is poised for significant growth, with investors and operators planning to increase their bed capacity by 70% over the next 2-5 years.
This expansion, representing €22 bn in investment, would bring the total number of PBSA beds across Europe to over 220,000, according to The Class Foundation and Savills’ 2024 European PBSA Investment Barometer.
However, even with this substantial growth, the current average European provision rate would only increase from 13% to 14%, assuming student numbers remain stable, the firms said. Even if all private PBSA owners mirrored this expansion, the overall provision rate would only reach 17%, highlighting the persistent supply-demand gap across Europe.
Spain (for 14% of all respondents), the UK (also 14%), the Netherlands (11%), Portugal (11%), and Germany (10%) are the most sought-after locations for new PBSA beds, according to the Barometer. Spain, Portugal, and Germany remain popular from last year’s survey, while the UK and the Netherlands are new additions.
The biggest concern for investors remains interest rate movements, with 81% of respondents citing it as a key challenge. Construction costs, affordability, and regulations also present challenges for the sector.
Kelly-anne Watson, managing director, The Class Foundation, said: ‘The 2024 European PBSA Investment Barometer shows that rising costs and regulatory pressures are top concerns for many investors. Strategic regulatory frameworks can empower investors to expand access to high-quality housing for students across Europe’s university cities, balancing financial viability with the critical need to access the right type of housing.’
Frank Uffen, co-founder, The Class Foundation, commented: ‘Our Barometer shows that investor interest in the sector remains very strong. The parties interviewed, representing c.16% of the total 2 million European PBSA beds, plan to expand their portfolios by 70% over the next 2-5 years. Yet, this growth alone won’t close the existing supply-demand mismatch. Bridging this gap requires national action plans and goals to create more accessible, purpose-built student accommodation that meet the needs of Europe’s growing student population.’
Richard Valentine-Selsey, head of European Living Research & Consultancy at Savills, added: ‘The European PBSA sector stands at a crossroads, and investors have a unique opportunity to define the landscape of purpose-built student accommodation. Their strategic decisions, allocation of resources, and vision will not only drive the sector’s growth but also elevate the living experience for the next generation of students. As the market continues to evolve, with a dynamic mix of players, investors must navigate economic challenges, respond to changing student demographics, and champion environmental sustainability.’
The survey involved 16 investors and operators with portfolios totalling over 132,000 beds across Europe, with an asset value of approximately €25.3 bn.
