New developments needed as demand for PBSA increases
Development of new PBSA in Europe must speed up to meet ever-growing demand, experts agreed at Real Asset Media’s recent Student Housing, Micro and Co-Living investment briefing.
“We need to put a framework in place which allows for more and significantly faster development of stock,” said Rainer Nonnengässer, executive chairman, International Campus. “The only solution is enabling those who are active in the market to build more”.
The current “vicious circle” of growing demand and lack of product leads to higher rents which affect families more than students, he said, but the solution is not rent controls, rather more development.
At the moment it takes five to six years to get a planning permit in the CEE region and two to three years in Germany, while the number of students continues to increase. The situation is no better in other European countries that are experiencing huge demand like Spain and Italy.
There should be a match between demand and supply, but instead there’s significantly more capital than opportunities to deploy it,” said Samuel Vetrak, CEO, Bonard. “The reason is that it is so difficult to get something developed in this asset class.”
Data shows market a long way from saturation
According to Bonard data, there are 180 new schemes a year coming to the market, which is nowhere near saturation. In the UK, Europe’s most mature market, the bed-to-student ratio is 30%, while in Continental Europe it is 14-16%.
“The market is crazy in the Netherlands and soon we’ll need an extra 50,000 beds to meet demand,” said Edvard van Luijn, director acquisitions, Rockfield Real Estate. “There’s a real opportunity to create new developments, but the authorities constantly underestimate the number of international students. The issue should be much higher on their agenda.”
The shortage of PBSA across Europe is acute even if the situation has not fully returned to normal after Covid-19 and international student mobility is still restricted.
“We should also keep in mind that that many students from countries like China, Australia or Canada are still absent because of visa and travel restrictions and when they come back in 2022 they will put additional pressure on the sector,” said Nonnengässer.