Hines: PBSA on the rise in Europe as demand grows

Student housing has become a mainstream asset class, as total European investment activity has increased from 1.9% in 2019 to 5.3% in 2024, according to new research published by Hines.

The report titled ‘Class Act: Redefining Student Living in Europe’ highlights the sector’s rapidly growing appeal to international investors as student demand continues to increase. 

“Building and acquiring purpose-built student living schemes in our preferred markets is a high-conviction investment theme for Hines globally”, said David Steinbach, Global Chief Investment Officer, Hines. “The number of young people choosing higher education in Europe remains on a fast growth trajectory and the undersupply of purpose-built student housing in cities with top universities is notable.”

The sharp increase from 1.9% of total European investment activity to 5.3% last year singles out PBSA as one of the fastest-growing real estate asset classes in Europe, confirming its transition from an emerging, niche sector to a mainstream, firmly established one in the eyes of investors worldwide. 

“The European PBSA sector is case study in how with the right fundamentals and market conditions, a niche asset class can build momentum and become a high conviction theme in a relatively short time frame”, said Joshua Scoville, Global Head of Research, Hines. “As student living continues to expand and evolve, so do the opportunities for real estate investors able to successfully identify student trends in terms of location then execute on delivering best in class facilities to attract what is now a discerning, international customer base.”

The research identifies the high and growing demand from domestic and inbound international students – combined with a slow and under-nourished supply line of high-quality, well-located accommodation – as determining factors underpinning investor confidence. The number of international students at European universities has grown by 16.3% since 2019 as institutions across the continent launch more English language offerings and the broad cultural appeal of European cities remains a draw for young people from key markets across the world. 

The report illustrates that the flight-to-quality trend evident in other sectors, such as Office and Retail, is also prevalent in PBSA. Europe’s top-ranked educational institutions experience the most significant spike in demand, with universities in the Global top 100 seeing an average uplift in total student numbers of just over 10%, with the next 100 seeing a rise of 5%.

 Generally for the most recent academic year, Hines research finds that rents are rising for PBSA, having generated positive year-over-year rent growth over every major country market and in some cases achieving rent growth that exceeds 10%. Most importantly, rent premiums are significantly stronger for privately owned/managed properties than for accommodation run by universities themselves. Schools with more international students saw significant rent premiums, by as much as 15% on average for PBSA, whereas for the same sample set, university-managed student accommodation delivered a rent premium to the metro average of closer to 6%.