PBSA: Continental European student accommodation deals almost hit $2 billion last year

The European student housing market has grown significantly in the past decade. Deals last year in continental Europe reached US$1.9bn, according to Knight Frank, notably up on levels recorded three years ago.

There are currently around 15 million full-time students across the region studying at 3,300 institutions, according to education and student housing data provider BONARD. Eurostat data indicates that full-time undergraduates have increased by 7.7% over the past three years.

An increase in the number of international students has contributed to this growth, with more than 2 million currently estimated to be attending universities across continental Europe. Improved access to visas and study permits, more English Taught Programmes (ETPs) and lower tuition fees (relative to the UK and US) have underpinned this rise, according to Knight Frank.

Meanwhile, Knight Frank says universities have formed partnerships with host cities as they seek to market their appeal to international applicants. Furthermore, the amount of budget allocated to the EU’s flagship Horizon research programme, which provides funding to support European research and innovation projects, has been increased significantly, a move which will strengthen university research across the continent and could have a knock-on impact on overall university funding and their appeal internationally.

There are currently an estimated 5 million students studying outside of their home country, according to the OECD. This number is forecast to rise to 8 million by 2025, with Europe likely to increase its share.

This has implications for local PBSA markets, according to Knight Frank. Currently, the average provision rate (the number of beds relative to students) across major European cities in continental Europe is 20%. The rising number of students choosing to study outside of their home town, city or country, however, means this shortfall is expanding.

Student numbers in Berlin, Madrid and Paris, for example, have increased on average by 2.5% per year over the three years to 2018. However, the supply of new PBSA bed spaces has not kept pace over this time. Assuming current trends, these three cities alone will have a supply gap of more than 100,000 beds in 2021 – just to maintain the 20% provision rate. Consequently, the appetite for investment is increasing.

Tomorrow we outline Knight Frank’s top five European cities primed to spearhead the growth in the European student accommodation sector.

james.wallace@realassetmedia.com