PBSA surges ahead as top investor priority in Europe

Purpose-built student accommodation has passed multi-family build-to-rent to become the number one target for real estate investors in Europe, according to Savills’ latest annual survey. The survey, conducted by Savills and Savills Investment Management, polled investors with a combined €720bn (£605bn) in real estate assets under management. PBSA topped the list, with 62% prioritising the sector, edging out multi-family, which saw a sharp drop from 84% to 57% year-on-year. “This year’s findings reflect growing confidence in the resilience and returns offered by PBSA – especially as demand for quality student housing continues to outpace supply across Europe,” said Marcus Roberts, head of Europe, Savills operational capital markets. Other living sectors also showed notable movement: senior living reached 41%, up from 29% last year, and care homes hit 35%, up from 16% from last year, while interest in co-living dipped slightly to 35%, down from 39%. Investor appetite for the hotel sector, particularly budget hotels, is also on the rise, buoyed by the recovery in international travel. Regionally, the UK and Ireland lead investor interest, followed by southern and western Europe. Meanwhile, pan-European strategies are gaining traction, rising from 10% to 16%. In terms of investment style, core-plus now dominates, preferred by 41% of investors – more than doubling from last year – indicating a cautiously optimistic outlook as market conditions begin to stabilise. Looking ahead, investors plan to deploy around €50bn into operational real estate over the next three years, with the lion’s share targeting the living sectors. Multi-family (€8.1bn) and PBSA (€7.4bn) are set to receive the greatest inflows. Environmental credentials remain front of mind, with 90% of investors expecting demand for ESG-compliant assets to rise. Yet barriers persist, from cost pressures to regulatory uncertainty. “Despite the headwinds, capital is ready to deploy, and lenders are competing for opportunities in OpRE,” said Charlie Bottomley, director, Savills Capital Advisors. “That’s a strong vote of confidence in the sector’s long-term fundamentals.”     Image © Adobe Stock