European PBSA sector could grow by 70% over the next 2-5 years
According to the 2024 European Purpose-Built Student Accommodation (PBSA) Investment Barometer*, conducted by The Class Foundation and Savills, involving investors and operators with portfolios totalling over 132,000 beds across Europe, with an asset value of c.€25.3bn, respondents expect to increase the number of beds they have by 70% over the next 2-5 years. This would bring the total to over 220,000 beds, deploying a further €22bn of capital.
However, this significant volume of investment would still only increase the current average European provision rate to 14% from 13%, assuming that student numbers remain at their current level. Even if all private European PBSA owners aimed to increase their holdings by the same amount, this would only push the overall PBSA provision rate to 17%, highlighting the significant supply-demand gap that remains across the continent and the scale of the opportunity for investors.
The most sought-after locations for new beds are Spain (for 14% of all respondents), the UK (also 14%), the Netherlands (11%), Portugal (11%) and Germany (10%). Spain, Portugal and Germany have remained amongst the most sought-after locations from last year’s Barometer, while the UK and the Netherlands are new entrants.
In terms of challenges, 81% of respondents are concerned about the effect of interest rate movements on their business, making it the highest-ranked issue. Investors are also concerned about construction costs, affordability and regulations.
Kelly-anne Watson, managing director, The Class Foundation, says: “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, adds: “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, comments: “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. Decisions taken now around new developments, financing, and adherence to ESG principles, will have lasting impacts across the sector.”
