Purpose-built student accommodation (PBSA) has claimed the top spot as
the preferred investment sector
for European operational real estate investors, surpassing multifamily
housing for the first time.
That’s according to a new survey by Savills and Savills Investment
Management of investors managing nearly £720 billion in real estate assets.
The findings highlight a shift in focus towards living sectors, with PBSA
attracting 62% of respondents’ interest, slightly down from 63% last year.
But PBSA has now overtaken multifamily investments, which fell from 84% to
57%.
Investors are targeting PBSA
Marcus Roberts, the firm’s head of Europe operational capital markets,
said: “Our survey reveals that respondents are looking to invest c.€50
billion over the next three years into Operational Real Estate (OpRE).
“The majority (73%) of this capital is targeting the living sectors, with
multifamily (€8.1 billion) and PBSA (€7.4 billion) expecting to see the
greatest inflows of capital.”
Harry de Ferry Foster, the head of the UK investment management, adds: “As
the most mature subsectors in living, we would expect to see European PBSA
and multifamily anchor institutional OpRE portfolios.
“Equally interesting is the deepening demand for exposure to nascent asset
categories like senior living, co-living and care; reflective of a
broadening base of opportunities available to investors in living but also
growing market sophistication.”
PBSA has growth potential
Savills’ survey underscores the strong growth potential of PBSA,
forecasting a 70% expansion in the sector over the next two to five years.
Investors say they are planning to channel around £50 billion into
operational real estate over the next three years.
Of that cash, the investors say that living sectors – particularly PBSA
(£7.4 billion) and multifamily (£8.1 billion) – are expected to receive
most of the capital.
Senior living and care homes have seen increased interest, with 41% and 35%
of investors targeting these areas, up from 29% and 16% respectively in
2024.
The hotel sector, particularly budget accommodation, is also experiencing a
resurgence, driven by the recovery of international travel in 2024 and
anticipated growth in 2025.
UK is a top investment destination
Geographically, the UK and Ireland lead as the top markets for investment
over the next three years, followed by Southern Europe (Italy, Spain and
Portugal) and Western Europe (France and BeNeLux).
The proportion of investors adopting a pan-European strategy has risen from
10% to 16% year-on-year, indicating a broader approach to capital
deployment.
Investment strategies are also shifting, Savills says.
The
survey
found that 51% of investors are already active in both PBSA and multifamily,
with 36% invested in care homes.
Within the hotel sector, lifestyle hotels are the most common subsector,
with 25% of respondents, while branded residences (7%) and affordable
housing (15%) remain an investment niche.
Savills’ capital advisor’s director, Charlie Bottomley, said: “We continue
to see robust liquidity across both bank and non-bank channels, driven in
part by the continued low level of transaction volumes.
“With fewer deals in the market, lenders are competing intensely for
opportunities, particularly in the OpRE sectors, which remain a top
priority for most capital providers.”
PBSA is an investors’ target
The managing director of Accommodation for Students, Simon Thompson, said:
“With PBSA now the top target for European investors and an anticipated
£7.4 billion influx over the next three years, the sector is poised for
significant growth, particularly in the UK.
“The forecast 70% expansion in PBSA over the next two to five years signals
strong demand, driven by a robust student population and a competitive
lending environment that supports new developments.”
He added: “The UK’s student accommodation market still offers potential and
landlords who seize this moment could find their investments will
flourish.”
