Investment in the European PBSA segment amounts to €11.7B up to September

Investment in the European PBSA segment amounts to €11.7B up to September

Between January and September 2022, the total volume of investment in the Purpose Built Student Accommodation segment was €11.7 billion, an increase of 130% on the same period in 2021 - according to Savills, this is a record high.

Through an increasing number of students attending university, and also the strong growth of international students relying on PBSA, investor interest in the sector is indeed being boosted. The number of young people in Europe (aged 15-19) is forecast to grow by 5.8% by 2027, so Savills expects this ongoing growth trajectory to continue in the coming years.

The average supply rate, total number of beds divided by the total number of students, in European cities is currently only 12.5%, down from 13% in 2021. Approximately 14,500 new PBSA beds are expected to be delivered in 2022 in the various European cities monitored by Savills, a number that is not enough to compensate for the rise in student numbers.

The public student housing market accounts for 63% of total PBSA beds on average across the European continent: the vast majority of existing stock is outdated and of lower quality compared to the newer private stock, the agency says. There is an imbalance between supply and demand that is increasingly attracting investors to the segment.

European PBSA is one of the top five sectors where investors are looking to intervene in the next 12 months, indicates a survey conducted by Savills of property investors with assets under management located in the EME region.

Lydia Brissy, Director European Research, Savills, points out that "the share of early financing deals as a percentage of total European PBSA investment has been steadily increasing over the past five years, accounting for 30% of total volume in 2022. Early financing deals are typical in countries with developing PBSA markets and limited available stock." The yield associated with PBSA prime across Europe currently stands at 4.15%, Savills points out.

Marcus Roberts, Head of Europe - Savills Operational Capital Markets, stresses that "the PBSA sector has continued to show that it is counter cyclical and provides a good opportunity for investors to balance their portfolios in times of economic downturn. It is a strong asset class and the positive sentiment in this segment demonstrates the confidence investors have in its resilience and ability to deliver safe returns."

Horacio Blum, Associate Director Investment - Savills Portugal, says that "Portugal currently has a structurally insufficient supply of beds for student accommodation, a sentiment that has been publicly highlighted in this new academic year. With an average supply rate still below the European average and an expanding demand potential for new residential segments and previously unexplored cities, there is significant room for growth and investment terms".

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