The Class Foundation and Savills’ new European Purpose Built Student Accommodation (PBSA) Investment Barometer Report reveals that 93,600 beds, equating to €12.3 billion in investments, can be expected over the next 2-5 years; led by Spain, Italy, Germany, France, and Portugal. According to Savills, there are currently 1.94 million PBSA beds (public and private) in Europe, with an estimated total value of c.€286 billion.
The report, published ahead of its largest industry on this market segment in Barcelona on the 9th of November, includes findings from a survey of European investors and operators who collectively manage PBSA assets worth €17.8 billion, highlights barriers that will impact investments into the PBSA market the next 2-5 years, with 45 percent citing that securing planning permission is a big challenge, as well as European and global economic growth, interest rate movements, inflation, housing, affordability and regulations. 62 percent of respondents also expressed that they intend to refurbish non-compliant stock for ESG regulations, while 23 percent plan to sell it.
Kelly-Anne Watson, Managing Director of The Class Foundation, noted: “This survey is key in providing the industry with information on the ambitions and concerns of our investors and operators. The data shows the strength and confidence of the PBSA sector after unprecedented growth in recent years. Investors are eager to meet the growing demand for PBSA by expanding in European markets. However, several challenges present us with a reality check that will need to be addressed by our community to ensure much-needed student housing will be built.”
Richard Valentine-Selsey, Director of Residential Research, Savills, said: “It’s great to have such valuable insights from European investors as a result of this survey and what’s interesting is the future growth plans or the sector, but also the
challenges preventing it from developing even further than that. Unsurprisingly, given the economic backdrop, equity and debt for development came out as the biggest concern. However, this also points to an opportunity for
investors who have already raised capital and are in a position to start deploying.”
As well as debt and equity, land acquisition and affordability were highlighted as the biggest challenges for investors in the report, with site connectivity remaining paramount when choosing green or brown belt land, closely followed by sustainability, construction costs, and complexity.