UK student housing investors set their sights on Europe

Major European cities are proving attractive to student accommodation builders after a downturn in the UK market.

Rising costs, tighter regulation and a housing crunch have made conditions more challenging in the UK in recent years, after a long period of rapid growth in purpose-built student accommodation (PBSA).

The number of new student beds added in the UK has roughly halved since the Covid-19 pandemic, from about 30,000 a year to around 15,000, according to Martin Blakey, the former chief executive of the housing charity Unipol.

“[The decline was caused by] a massive increase in regulation following Grenfell, significant remedial work required on existing estates as a result of the Building Safety Act, and a substantial rise in construction costs,” he said, referring to the legislation introduced after the 2017 Grenfell Tower tragedy to improve building safety standards. 

More UK students are also choosing to live at home instead of renting, he added, citing data from Ucas showing a 2-3 per cent rise year-on-year over the past four years. 

With fewer opportunities in the UK, investors have moved to either constructing build-to-rent properties or student housing in Europe, where there’s an acute housing shortage in several major cities, Blakey added. The trend first emerged around a decade ago as a “trickle” but has gathered momentum in recent years. 

US-based Greystar, which is active in the UK, recently closed a €2.7 billion (£2.3 billion) pan-European fund covering student and multifamily housing. Other firms have followed with major acquisitions, including a €330 million Spanish student housing portfolio bought by Nuveen last month.

Spain, Italy, France and Germany are attracting strong investor interest, according to Kelly-anne Watson, managing director at The Class Foundation, a Netherlands-based non-profit organisation that represents the European student housing sector.

Those countries “at this moment have the highest, both international and domestic targets in terms of attracting new students”, she added.

But not every market has managed growth well. The Netherlands had a massive surge in English-taught degree programmes through the 2010s without expanding housing to match.

The result, Watson said, was a student housing crisis in Amsterdam worse than even London’s. “They had one bed to 12 applicants at the time in Amsterdam,” she said, compared with a ratio of one to four in London’s most constrained areas.

According to The Class Foundation, Dutch higher education institutions in 2025-26 saw a continuing decline in the number of first-year students, with Dutch universities seeing falling enrolments every year since 2020, with projections suggesting a near 10 per cent reduction in total students over the next decade. Slowing enrolment could temper demand for new student accommodation, even in markets that have experienced acute housing shortages.

Across Europe, there is an expected shortfall of about 300,000 student beds by 2030, according to Watson, who cited research carried out by her foundation and JLL, a commercial real estate and property investment firm.

Much of the accommodation still targets wealthier international students able to pay premium rents, unlike domestic students, explained Danielle Sanderson, an associate professor of real estate at the Bartlett School of Planning at UCL.  

“The sort of full amenity, hotel-ification type of student housing is primarily, I would say, for overseas students,” she said, adding that international students are more likely to seek purpose-built accommodation because they arrive without local housing networks and need more certainty before starting university.

PBSA could play a role in easing pressure on housing markets by reducing competition between students and local residents for existing homes, she added. 

“By building a new student housing block, you aren’t taking existing stock away from others,” she said. “It is a pragmatic solution to providing accommodation for students.”

Sanderson added that the sector’s future depends heavily on international student mobility. While institutional investors are attracted by PBSA’s relatively stable income, changes in migration policy or declining overseas enrolment could create challenges.

seher.asaf@timeshighereducation.com