PBSA rent growth outpaces inflation in Europe: Bonard

Now is a good time to invest in student housing according to research firm Bonard whose latest intelligence report states that rents in the European student housing sector rose by 6.5% in 2023, by 5.4% in 2024 and are projected to outpace inflation “by a wide margin” in the next 6-12 months.

In 2023, rents grew by 6.5% against an inflation rate of 5.3%. In 2024, inflation rates are projected to decrease to 2.5%, but rents are already 5.4% higher than in 2023. Rental growth in 2024 is outpacing forecast inflation rates in 10 of the 15 countries surveyed.

Furthermore, despite the rises in rents, demand for student beds continues to grow “unabated”. Respondents reported a 98% average occupancy rate in 2024, according to the report, which was based on a survey of 12,000 purpose-built student accommodation operations in 15 cities. Occupancy rates rose from 95.7% in 2021 to 98% in 2023. The fastest growth was observed in Spain, Austria, and the UK.

“High and rising PBSA occupancy rates across the majority of European cities underscore strong student demand, which enables the market to comfortably accommodate an average rental growth of 5-8%,” said Bonard’s real estate business development director Martin Varga.

“Demand for PBSA has been growing steadily over the past decade, except for a slight decrease during the pandemic crisis, and all signs point to ongoing growth.”

The number of students is rising and student preferences are also becoming more sophisticated Varga said. “We observe a growing interest for quality PBSA options with a range of additional services and amenities.”

There is substantial shortage of beds in most European student destinations and London and Paris would need an additional 180,000 and 195,000 beds respectively to meet student demand. In the UK, which has the most developed PBSA market in Europe, the provision rate is 40%. Germany and France are about 20%, Spain is 16% and in Italy it is only 10%.

Other cities with a notable shortfall include Warsaw (107,000), Lisbon (78,000), Vienna (75,000) and Rome (71,000). However, the situation is broadly similar across all 15 cities surveyed Bonard pointed out.

Rents are growing faster than before the pandemic and although this year’s rate of growth is less than in 2023, in France, Spain, and the UK it is still accelerating.

“As European study destinations remain undersupplied, it is reasonable to expect that rents will keep growing steadily for the next 3-5 years. Occupancy rates are also projected to rise even further,” said Bonards rented residential director Julia Oravec.

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