The Purpose-Built Student Accommodation (PBSA) market has been exploding across Europe over recent years with investors keen to cash in on an increasingly profitable asset in one of the world’s most robust property markets.
The main reason for this growth is that the sector enjoys a rapidly increasing customer base whilst the available supply struggles to keep pace. Across European capitals, which are home to some of the world’s best universities, more individual investors are following the lead of larger developers in seeing the potential in student accommodation.
The volume and profitability of investing in PBSA has been growing at one of the fastest rates of any property class. According to Cushman & Wakefield’s latest research, the fastest growing cities are mainly in the UK.
Coming in at number one across the world was London, with US$2.4bn invested in the first two quarters of the year. Other notable European heavyweights were Vienna in second place, Madrid in third, Paris in fourth, Barcelona in fifth and Berlin in sixth.
After that things get interesting with the next three spaces in the top 10 taken by UK cities with a rapidly growing student population and student investment market. In 7th was Sheffield, home to two excellent universities, which attracted a massive US$219m in investment over the same period.
In 8th was Coventry with US$206m in investment, and Swansea at 9th with US$132m. The only other two cities in the top ten that weren’t European capitals were Barcelona and Hamburg, which was 10th.
Ranking them globally Sheffield and Coventry attracted more PBSA investment than Chicago and Seattle in the USA and Melbourne in Australia.
When commenting on the high ranking of UK cities, Paddy Allen of Cushman & Wakefield said: “The sector in Europe still needs to be built out, while the UK market is more established. Interest in the European market has definitely risen in the past year, but it has come off a very low base of essentially zero.”
With lower prices than cities such as Paris and Barcelona, UK cities offer a much better starting point for smaller or first time investors keen to scope things out and build up. With the sector expected to continue in the same vein it has done over the past five years, this looks to be a savvy move.