The latest edition of the BONARD Investment Intelligence Report analyses the most recent figures on rental growth in the European Purpose-Built Student Accommodation (PBSA) sector.
According to BONARD’s data, rents in the European student housing sector increased by 6.5 percent in 2023 and an additional 5.4 percent in 2024. Rental growth will continue outpacing inflation over the next 6 to 12 months.
Despite rising rents, demand remains strong. A survey conducted by BONARD as part of its ongoing market monitoring reported a 98 percent average occupancy rate in 2024 for operators in the PBSA sector.
“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 percent,” said Martin Varga, Real Estate Business Development Director at BONARD.
Demand for PBSA has steadily grown over the past decade, aside from a slight dip during the pandemic. BONARD’s analysis suggests ongoing growth, driven by rising student numbers and increasingly sophisticated preferences. Students are showing more interest in quality PBSA options with a wider range of services and amenities.
The market remains severely undersupplied, with accommodation shortages in most European student destinations. Hotspots like London and Paris would require an additional 180,000 and 195,000 beds, respectively, to meet current demand.
These conditions make the student housing sector highly attractive to investors.
“Sizeable investment is needed to meet existing student demand. The sector needs more capital to develop and reach its full potential. This is a particularly advantageous time for investors to step in,” added Varga.
The newly released BONARD report includes the latest data on rent levels, occupancy rates, and demand in the European PBSA sector, based on a survey of 12,000 PBSA operations in 15 cities.
Key Findings:
- Rents continue to grow faster than pre-pandemic times. Although growth slowed slightly in 2024 compared to 2023, three countries (France, Spain, and the UK) still saw accelerating rental growth.
- Rental growth outpaces inflation, and the gap is widening. In 2023, rents grew by 6.5 percent, compared to a 5.3 percent inflation rate. In 2024, inflation is expected to fall to 2.5 percent, yet rents have already increased by 5.4 percent. Rental growth in 2024 outpaced inflation forecasts in 10 out of the 15 surveyed countries.
- Occupancy rates rose from 95.7 percent in 2021 to 98 percent in 2023, with the fastest growth in Spain, Austria, and the UK.
- Provision rates remain low. In the UK, the most developed PBSA market, the provision rate is 40 percent. In Germany and France, it’s around 20 percent, in Spain 16 percent, and in Italy only 10 percent.
- Cities with high bed shortages include Warsaw (107,000), Lisbon (78,000), Vienna (75,000), and Rome (71,000). Similar conditions are seen across all 15 cities surveyed.
The scenario is unlikely to change dramatically in the short term.
Julia Oravec, Rented Residential Director at BONARD, noted: “As European study destinations remain undersupplied, it is reasonable to expect rents to continue rising steadily for the next 3-5 years. Occupancy rates are also projected to rise even further. We expect rental growth to remain above inflation in the majority of countries, making student housing one of the most attractive investment opportunities on the market.”
