Europe's PBSA rents outpace inflation
Purpose-built student accommodation (PBSA) rents in Europe are continuing to surge, outpacing inflation and providing a promising investment opportunity, says research firm Bonard.
Its latest intelligence report highlights that rents in the European PBSA sector rose by a significant 6.5% in 2023 and by 5.4% in 2024.
In 2023, inflation was 5.3%, and this year is projected to be 2.5%.
Also, Bonard predicts that this rent growth will continue to exceed inflation rates - 'by a wide margin' - in the next six to 2 months.
As a result, the firm says that now is a good time to invest in this student housing sector.
Rising PBSA occupancy rates
Bonard's real estate business development director, Martin Varga, said: "High and rising PBSA occupancy rates across the majority of European cities underscore strong student demand, which enables the market to comfortably accommodate an average rental growth of 5-8%.
"Demand for PBSA has been growing steadily over the past decade, except for a slight decrease during the pandemic crisis, and all signs point to ongoing growth."
He added that student numbers are rising quickly - but their preferences are becoming more sophisticated.
Mr Varga said: "We observe a growing interest for quality PBSA options with a range of additional services and amenities."
Demand for student beds
The report, based on a survey of 12,000 PBSA operations in 15 cities, reveals that the demand for student beds remains strong.
Occupancy rates reached 98% in 2024, up from 95.7% in 2021.
Spain, Austria and the UK experienced the most rapid growth in occupancy, the research found.
Shortage of PBSA beds
Despite the rising rents, many European student destinations face a big shortage of PBSA beds.
London and Paris, for example, would need an extra 180,000 and 195,000 beds respectively to meet student demand.
The UK, while having the most developed PBSA market in Europe, still has a provision rate of only 40%, compared to 20% in Germany and France, 16% in Spain and just 10% in Italy.
Other cities with notable PBSA shortfalls include Warsaw (107,000), Lisbon (78,000), Vienna (75,000) and Rome (71,000).
However, Bonard points out that this shortage is a common issue across all 15 cities surveyed.
The firm's rented residential director, Julia Oravec, said: "As European study destinations remain undersupplied, it is reasonable to expect that rents will keep growing steadily for the next three to five years.
"Occupancy rates are also projected to rise even further."
Student housing market in the UK
The managing director of Accommodation for Students, Simon Thompson, said: "The student housing market in the UK is growing with soaring demand and rising rents.
"The research shows that PBSA potentially offers a prime investment opportunity."
He added: "It's interesting that rents are outpacing inflation, ensuring a healthy return on investment for all student landlords, both private and PBSA.
"Demand is still strong to deliver the returns - that's mainly down to the downturn in supply which the government needs to appreciate and encourage more student landlords into the student accommodation sector."
