Unmet Demand for Student Housing

Current unmet demand for beds reaches 4.7 million in the top European cities, only 15% students can access purpose-built student accommodation (PBSA) 

In Europe, private PBSA studios are on average 21% cheaper for students than renting studios in the Private Rental Sector (PRS). Global real estate consultant JLL’s analysis of 20 major European cities shows that when including utility costs, rents for private PBSA studios are more affordable than renting a PRS studio in almost every single market – even the least affordable rental cities in Europe.

Unmet demand for student beds surpasses 150,000 in both London and Paris. In smaller markets, such as Berlin and Brussels, unmet demand can be as high as 50% of the student population, according to JLL.

The top markets where students can save money by living in PBSA include Amsterdam (-46%), Rome (-40%) and London (-37%). Just two cities were found to have higher costs in PBSA, Toulouse (+5%) and Milan (+3%). In Warsaw, students who opt for PBSA accommodation can enjoy savings of up to 24% compared to renting a studio in an institutional PRS scheme. When it comes to selecting their living arrangements, price is just one piece of the puzzle for students. They also highly value amenities such as gyms, co-working spaces, study rooms, libraries, and game rooms, and are willing to invest extra to access these features. It's worth noting that in Poland public dormitories offer accommodation mostly in a low quality multi-bedded rooms and fall short in providing the desired amenities and overall quality of private student housing schemes.

With 1.2 million students, Poland ranks as Europe's sixth-largest potential market for student accommodation operators which is not far behind Spain and Italy and the Polish market potential is 2-3 times larger than in the Netherlands. JLL estimates suggest an unmet demand for student housing of 200-400 thousand beds, fuelled in large part by the significant number of domestic mobile students who relocate to other cities for their studies, along with the increasing influx of international students. The student housing market in Poland is still in its nascent stages, presenting investors with compelling opportunities for attractive yields and capital value growth.

JLL recently reported that European PRS listings were down 14% after the summer period. In cities with high numbers of students, the fall in available rental homes were even more pronounced: -61% in Utrecht, -58% in Stuttgart, -40% in Brussels, -38% in Lyon and -28% in both Manchester and Birmingham. Over the past three years, there has been a noticeable decrease in the availability of rental apartments in major cities throughout Poland. This decline started even before the new wave of migration from Ukraine. Compared to the beginning of 2021, there has been a significant reduction of 40-70% in the number of available apartments, depending on the city.

Meanwhile, rental rates in operational projects within Poland's student accommodation sector have experienced significant growth in the past three years, ranging between 30% and 60% depending on the specific city and asset. Warsaw recorded an impressive growth of 50%. In Łódź, rents increased by approximately 30%, while Tri-City saw an impressive growth of 50-60%. Similarly, Wrocław experienced a substantial increase of 30-50%, Kraków witnessed a surge of 40-60%. These figures clearly demonstrate that the new supply of student housing stock is unable to keep up with the growing demand.

Dominika Mocova, Senior Analyst for EMEA Living at JLL, said: “The long-term investment case for PBSA is more solid than ever. Developing more PBSA across the continent would be a game changer for students who cannot find appropriate housing. It’s also essential to universities, whose reputations can suffer when they are unable to provide appropriate housing. Finally, those additional homes would also help ease pressure on the PRS market.”

Julia Martin, Head of Student Housing EMEA at JLL, commented: “From established capital cities to smaller, tertiary education focused cities, the PBSA sector has real potential to help plug the gaps in the European student housing market. High financing and construction costs have limited new development more recently, leading to a significant pent-up demand from students who are being forced into the private rental sector. As investors gain clarity on pricing, there is a big opportunity to tackle this challenge across the continent.”

Marcin Niemiec, Analyst for JLL Living Investments Poland, said: “The Polish PBSA market is backed by strong fundamentals, including the inadequate availability of public student accommodation that meets proper standards. Polish students, often with the financial support of their parents, are increasingly prioritizing optimal living and studying conditions, particularly when it comes to their first experience in a new city. To a large extent, the institutional student accommodation in Poland also caters to foreign students from Western Europe who value the living standards of their home countries and expect a comparable level of comfort during their student exchange in Poland. Moreover, there is a significant influx of long-term migration from Ukraine, further driving the demand for student housing.”