Savills: The increase in the number of students in Europe to stimulate the PBSA demand
The number of students, according to the international real estate company, increased significantly last year in the nine European countries surveyed.
On average, the annual number of students increased by 2.4% between 2020-2021 and 2019-2020 – in Sweden, Denmark, Italy, the Netherlands, France, Germany, Spain, Poland , in the Czech Republic, Portugal and the United Kingdom, while it decreased by 1.2% between 2018-19 and 2019-20.
The strongest growth was recorded in the Netherlands, where the number of students increased by 6.4%. The Dutch market recorded an 11% increase in foreign requests.
Savills’ latest report on student housing in Europe, released today, also shows that the total number of young Europeans (aged 20-29) in major student cities has started to stabilize and increase from 2017, after a decade of decline, according to Oxford Economic Data. In places where the supply of specially designed student accommodation (PBSA) is limited, this increase in demand will eventually put upward pressure on rental levels.
As overall LPP rental levels have plateaued over the past 18 months due to the pandemic, Savills expects rents to start slowly rising again next year, in line with the overall residential market.
Strong rental growth is expected in some cities where the overall PBSA bed supply rate is low, such as Rome, Milan, Valencia and Lisbon.
Lydia Brissy, European Research Director at Savills, said: “Despite a strong development pipeline in all European cities, we believe supply will be insufficient to meet pent-up demand. We actually expect the imbalance of demand and supply to be exacerbated in the next 12 months. ”
This will be made worse by the fact that most development activities were put on hold during the pandemic and now face further delays due to major supply chain disruptions in the construction industry.
In most European cities, the occupancy rate of the PBSA is back or close to pre-pandemic levels: generally north of 90%. Further increases are expected in the coming year, Savills said.
The company also predicts that investing activity – which was € 5.8 billion in the first three quarters of the year – will intensify over the next 12 months. As investors continue to seek value in living sectors, further consolidation in the ABPP sector is likely.
Savills also anticipates a growing number of cross-border acquisitions and a growing number of active players in the market.
Marcus Roberts, Head of Europe, Operational Capital Markets, said: “Towards the end of 2022, we expect to see the next wave of portfolio transactions, as the first generation of developers and operators will be ready to sell their assets and withdraw. In total, we expect 2021 end-of-year volumes to reach 8.4 billion euros and 2022 volumes to be in line with the record level (around 9.5 billion euros) seen in 2019 ” .