Purpose-Built Student Accommodation: The Pan-European Opportunity

Dana Salbak

In her capacity within the EMEA Living Research & Strategy team, Dana is responsible for identifying & analyzing key trends in the residential, student, and later living investment markets across EMEA. She is responsible for overseeing the production of market-leading research content focused on exploring current and forward-looking Living trends and applying these insights for client strategies. With 10 years of experience in finance, research and advisory roles, Dana has extensive knowledge of the factors and trends impacting the real estate markets. She leverages this proactively for thought leadership content, key client projects, and business development efforts. She plays an integral role in partnering with the business to promote and maintain quality data. She oversees a team of regional research staff and continuously strives to foster a team environment that is collaborative and forward-thinking.

With international students on the move and the appeal of European countries gaining momentum, demand for purpose-built student accommodation (PBSA) is likely to increase. However, unlike the UK, European cities continue to lack quality-grade, professionally managed products. This presents a significant opportunity for stakeholders to collaborate and develop accommodation that offers a value-add experience to students that complements their learning experience. 

Shifting student trends

While the UK hosts a large percentage of international students, the Institute of International Education data shows that the Netherlands, Poland, and Germany saw their international student enrolment numbers increase 9.6%, 7.6%, and 7.1 respectively, year-on-year, in 2020. While these enrollment figures also represent virtual learning, attending universities goes beyond lectures, and presents the first opportunity for students to live independently, engage and network in a new environment. 

The challenge, however, lies in providing PBSA for the growing student numbers. Based on JLL estimates, a total of 2.24 beds are needed to meet the demand from international and domestic mobile students in the more prominent European student cities. While this unmet demand may be compensated for by  the more traditional forms of shared housing, PBSA provides additional amenities, support, safety, and proximity to universities, which other private rental products are unable to offer. 

So, what does the future of the PBSA sector In Europe hold as the higher education sector gains prominence and investors look for scale?

Collaboration between stakeholders

Growing challenges such as land scarcity, high construction costs, and limited stock will usher in deeper collaboration between private sector operators, investors, and developers. In the short term, with a shortage of quality PBSA across the continent, development will likely be the key driver as investors partner with developers to build scale rapidly. This will open up joint ventures and arrangements that ensure specialist operators manage and lease the space. Longer-term, as universities look to expand their student base, there exists an opportunity to partner with investors to develop their offering and provide an all-inclusive service beyond a quality education, of which accommodation is an integral part.  

Wellbeing and community at the core of strategies

As students have greater expectations from their university experience, the demand for quality and inclusive spaces will increase. While location, room size and specifications are among the vital PBSA considerations, increasingly young people also want to be part of a community and forge new networks. The range of amenities provided (gym, co-working / co-studying spaces, lounges etc.) to cater to a growing customer base will also become more relevant. Operators will need to recognize and respond to these needs through additional service provisions and collaborative design.

Accelerating digital integration

Similarly, leveraging technologies to deliver a successful student experience will be a key differentiating factor for many developments. Engaging digitally native students is more critical, especially in the wake of the pandemic, and will distinguish PBSA from traditional house-share models. Many lessons can be drawn from the experience in commercial real estate, where a robust connectivity infrastructure and digital solutions improved productivity and functionality. The best and most competitive operators are those that can evolve their products, which will include expanding the online footprint.

As European study destinations grow in relevance, providing quality PBSA to support the student experience and drive performance becomes a more critical success component. While most institutions and schools may lack the financing and expertise to develop quality housing, partnering with private sector operators and investors to provide innovative student housing models will be a key differentiating factor. 

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