Non-profit organisation The Class Foundation and real estate company Savills’ new European PBSA Investment Barometer Report reveals that 93,600 beds, equating to €12.3bn in investments, can be expected over the next two to five years. This will be led by Spain, Italy, Germany, France and Portugal.
Published during The Class Foundation Conference in Barcelona today (9 November 2023), the report includes findings from a survey of 11 European investors and operators who collectively manage PBSA assets worth €17.8bn, totalling 122,500 PBSA beds.
According to Savills, there are currently 1.94 million PBSA beds (public and private) across Europe, with an estimated total value of c.€286bn. Respondents to the survey expect to see significant growth in the number of private beds being added to the European market, with a further 93.6k expected over the next few years. This equates to an additional investment of €12.3bn in the delivery of new supply.
“This survey is key in providing the industry with information on the ambitions and concerns of our investors and operators. The data shows the strength and confidence of the PBSA sector after unprecedented growth in recent years. Investors are eager to meet growing demand for PBSA by expanding in markets across Europe. However, several challenges present us with a reality check will need to be addressed by our community to ensure much needed student housing will be built.”
Kelly-Anne Watson, Managing Director (MD), The Class Foundation
The report highlights the barriers that will impact investments into the PBSA market within the next two to five years, with 45% citing that securing planning permission is a big challenge. Alongside this, European and global economic growth, interest rate movements, inflation, housing, affordability, and regulations have collectively caused disruption to the progress of the sector’s investment.
Respondents were also asked how they plan to deal with current stock that doesn’t meet ESG standards. 62% said that they intend to refurbish non-compliant stock for ESG regulations, while 23% plan to sell it.
“It’s great to have such valuable insights from European investors as a result of this survey and what’s interesting is the future growth plans or the sector, but also the challenges preventing it from developing even further than that.
“Unsurprisingly, given the economic backdrop, equity and debt for development came out as the biggest concern. This does however also point to an opportunity for those investors who have already raised capital and are able to start deploying.”
Richard Valentine-Selsey, Director, Residential Research, Savills
As well as debt and equity, land acquisition and affordability were also highlighted as the biggest challenges for investors in the report, with site connectivity remaining paramount when choosing green or brown belt land, closely followed by sustainability, construction costs and complexity.
