Serviced living: an asset class with a future

Institutional interest in serviced living is growing as urbanisation, housing shortages and changing accommodation needs create demand across Europe.

Alternative living concepts are gaining importance across Europe’s cities. Demand for flexible, well-connected, service-oriented accommodation is growing – and with it institutional investor interest in micro-living, co-living and purpose-built student accommodation (PBSA). Pbb is supporting this development, with a clear focus on quality, location and sustainable market structures.

Once considered a niche segment, serviced living has emerged as a response to changing housing and educational needs in European cities. Demand for professionally managed accommodation is increasing, establishing serviced living as an asset class of growing institutional relevance.

Key drivers include urbanisation, housing shortages, high construction costs and demand for flexible, furnished accommodation with additional services.

For pbb, this is not a new market. The bank has built a strong track record in serviced living and has supported the asset class with financing expertise and market knowledge. Pbb sees long-term potential, focusing on locations, operators and resilient market fundamentals rather than short-term trends.

Understanding the different concepts

While serviced apartments are commercially operated, hotel-like and cater to shorter stays, serviced living has a stronger residential character and generally involves longer occupancy. Its most prominent segment is PBSA – housing specifically designed and operated for students.

Micro-living and co-living also respond to demand for flexibility but have different target groups, use and operating models. Pbb expects demand for student housing and co-living to continue growing, as metropolitan populations grow and working patterns evolve over time.

The market is becoming increasingly professionalised and pbb sees potential for optimisation in costs, marketing and pricing. As traditional asset classes such as offices face structural challenges, serviced living and PBSA account for a growing share of real estate investment across Germany and Europe. Student accommodation offers an additional advantage: historically, demand has proven relatively counter-cyclical.

Financing with a long-term perspective

Pbb’s financing approach is based on a differentiated assessment of location, operator and operating concept. A project must demonstrate that demand, micro-location, competitive environment and product quality are aligned.

For student housing, pbb focuses on cities with more than 50,000 students across its core markets, while in Germany it also considers smaller university cities. For co-living, the bank targets larger regional cities with strong economies, an influx of young professionals or project workers, and constrained housing markets.

The quality and experience of the operator are important. There is now a relatively broad market of student housing operators in Europe, which is also important from a financing perspective because it provides alternatives.

Alternative uses are considered as a fallback. Where liquidity or alternative-use potential is limited, this may affect the lending value or leverage available for a project.

The long-term resilience of serviced living depends on multiple factors. Location remains fundamental, particularly as universities and major employment centres are firmly established within their cities. Properties must meet users’ needs while remaining flexible, sustainable and economically viable.

Experienced operators play a key role in balancing these requirements. They must respond to challenges such as rising energy costs while combining sustainability and economic efficiency for the benefit of residents.

When location, concept, operator expertise and a robust business plan come together, serviced living can offer the fundamentals required for successful long-term real estate financing.