PBSA: Knight Frank picks top five European cities primed for student accommodation sector growth

Berlin, Lisbon, Madrid, Milan and Paris are the five European cities tipped by Knight Frank to spearhead the growth in the European student accommodation sector over the coming years.

Knight Frank has published an extensive global report, in entitled Global Student Property 2019, which examines key global trends from across the student property sector, including the structural undersupply present across markets at all stages of development.

The five cities tipped by Knight Frank are:

  1. Berlin.The number of international students studying in Berlin increased by 25% between 2013/14 and 2017/18. Student housing demand currently outweighs PBSA supply by approximately ten to one. Even with a strong PBSA pipeline of projects due to be delivered over the coming three years, forecasts for student growth mean this imbalance will remain
  2. Lisbon.The PBSA market in Lisbon is relatively immature. Meanwhile, student numbers continue to climb, with a 21% increase in international students since 2013/14 alone. This contrasts with a pipeline of private PBSA that represents growth in supply of just 3% in the next three years.
  3. Madrid.Madrid has a student population of almost 315,000, with an international student population of 47,500. PBSA provision accounts for 31% (see fig 4) of current supply, though most of this stock is over a decade old. Planning regulations in Madrid are more favourable than other Spanish cities, including Barcel
  4. Milan.Milan is the second most undersupplied PBSA market in continental Europe with current provision representing just 4.5% of students. To reach the average level of provision across the continent of 20%, PBSA bed spaces would need to increase by almost 30,000
  5. Paris.Five of Paris’ universities are within the top 250 institutions in the world. In 2018, the city was voted the second-most welcoming city for students in France. Despite its popularity, Paris remains an undersupplied market. Even with a pipeline of 10,000 bed spaces, the city would require a further 42,000 for PBSA provision to reach the 20% average across European markets.

James Pullan, Global Head of Student Property at Knight Frank, explains:

“Development is the key driver of deals within European markets. New PBSA development across the region is moving away from dormitory style accommodation towards provision with facilities and amenities that aim to enrich the student experience. Investors are looking to build scale quickly, with a strong focus on partnering with developers.

“There are relatively few established specialist operators across the continent, and whilst there is a push to develop and acquire assets, the real key to the success of a student accommodation provider is its ability to deliver customer care, service and brand recognition. European markets represent significant opportunities for owner/operators to lead from the front.”

james.wallace@realassetmedia.com