Local demographics, strong Asian demand and potential wayward tilt from US drive upside.
With both new construction costs and economic uncertainty weighing on global residential real estate, one segment is set to stand out in Europe, according to Cushman & Wakefield. And it's across the quad.
Indeed, university housing seem to be having a moment; in the United States, even Baby Boomers seem to have a newfound affinity for dorm life. But European purpose-built student accommodation (PBSA), as it is more artfully known in the industry, has far more than that going for it, argues C&W.
State of Play: PBSA, while small relative to other resi segments, has always had strong economics and protections going for it. Demographics for university-aged students are set to peak in the next 10 to 15 years in many European markets (including EM Poland, which is second highest on population), meaning inbuilt demand for student housing will continue upwards. Beyond those numbers, and unlike the United States, where the cultural imperative towards higher education is waning, it remains strong and steady here.
A growing percentage of demand also comes from abroad. C&W notes strong growth in international student flocking to the continent, now touching as high as 30 percent (in the UK) of total student population. Particularly coming from Asia, these students tend to have wealth resources allowing them to afford premium accommodation and proximity to campuses, city centers (or both). And with Trump-era policy imperiling American attractiveness for the segment, they could tilt still further towards European options in the near term.
OQ View: Developing or investing in Euro PBSA isn't without challenges: privatization has been slower moving than in the US, limiting investable opportunities. Universities also tend to be more urban and closely regulated in the region, raising costs to manage (if not also construct); and demand growth relies on internationalization, supported by policy both within the EU and UK and outside, as well as efforts keeping higher education relevant and accessible.
But with global education still underpinned by strong social, cultural and economic currency, it is hard to imagine any of those outweighing the upside.
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