Hines has reported that European investment activity in purpose-built student accommodation (PBSA) moves the sector from a niche to mainstream asset class. Increased student demand and a lack of supply are among the drivers identified as compelling investors to enter the sector.
Hines has published the information in a paper – Class Act: Redefining Student Living in Europe – which highlights the sector’s rapidly growing appeal to international investors.
The research reveals the growth of European PBSA as an investable asset over the last few years, with total investment rising sharply from 1.9% of total European investment activity in 2019 to 5.3% as of the end of 2024.
According to Hines, this increase 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 and 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.
“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.”
Joshua Scoville, Global Head of Research, Hines
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.
Hines’ 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-on-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%.
“Building and acquiring PBSA living schemes in our preferred markets is a high-conviction investment theme for Hines globally. 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.”
David Steinbach, Global Chief Investment Officer, Hines
