European PBSA investment in 2024 soared 34 percent to €7.2 billion according to JLL, with the mature UK market accounting for 62 percent of investment, followed by Spain at 12 percent, double the 2019-23 share.
Ireland, the Netherlands and Spain were Europe’s fastest-growing markets last year, as investors pursued supply shortages to boost revenues. With rental growth projected to remain strong in 2025/26, outpacing inflation, investor interest seems set to continue unabated.
Operational dynamic
Yet like several of real estate’s more recent obsessions – including hospitality – student housing has an operational dynamic requiring a certain skill set. From revenue management and amenity provision to customer service, PBSA has in fact taken several cues from the hospitality industry, while trying to carve out its own innovative path.
Duncan Garrood, CEO of UK-focused operator Empiric Student Property, sees success in PBSA as primarily being about “driving earnings through delivering customer service”. Prior to his latest role in the student housing sector, Garrood led teams in retail, pubs, hospitality, food and entertainment, including a spell at Starbucks. “In the era of operational real estate, the property industry needs people who have run hospitality or service-facing businesses,” he suggests.
Student housing units, like hotels, “take physical infrastructure and combine it with a consumable experience and a service experience,” he notes. Yet Garrood suggests that it is often hard to find professional teams that are capable of delivering on all three aspects.
Alex Greaves, global head of living at M&G Real Estate, sees evidence of more and more transference between hospitality and real estate, contributing a richness of experience to both worlds. “Student housing has been around for 30 years in the UK now, and we see professionals moving from PBSA to BTR, or in and out of hospitality to round out their experience,” he says.
M&G divides its property management resources between a head office which typically deals with aspects such as compliance, legal and the technical side of building maintenance, notes Greaves, while staff on the ground at student or residential complexes are “much more hospitality focused”, he says.
Opportunities in PBSA
There are also important ways in which PBSA differs from hospitality, creating distinct opportunities in terms of revenue and client relations.
“If you work in the restaurant trade, you have your client for a couple of hours max,” says Garrood. “At Starbucks, we had five minutes to deliver service and make a customer feel valued.” Hotel operators, in turn have a few days to wow their guests, he adds. “With student housing, the window of experience is a year,” he says. “We have the same basic ingredients as a hotel, but we have to deliver that experience day in day out, on a 51-week basis. That gives you a very different relationship with your customer.”
Garrood notes that while for some student operators, that “captive” guest is simply a route to stable profits, at Empiric, he says, the approach is that “if we do a great job for a year, you will stay with us for another year”. Noting that a large proportion of students select accommodation based on word-of-mouth recommendation, he says that positive chat can have more weight than “a fancy website, social media presence, or direct marketing”. This particularly comes into play with overseas students, he says, with many Chinese undergraduates that stay in Empiric properties telling their friends about it. “We also have a platform on WeChat, much of which is operated via AI, to improve access to Chinese customers,” he adds.
Marketing potential
Direct marketing to student occupants, in turn, can involve highly detailed pitches, thanks to having such specific guests. “The more you can be very clear about the customer base, the easier your messaging is,” he confirms. Garrood adds that market research has been crucial in tailoring products to undergraduates versus post-graduates. “Undergraduates want gyms on site, communal lounges and study rooms, as well as entertainment spaces where they can play computer games together, which are more important than movie rooms,” he says.
He explains that the number one ask for postgraduates, meanwhile, is “no undergraduates!” Postgrads prefer more self-contained accommodation, which is configured for dual occupancy, larger kitchens and in-room washing machines. “They don’t mind going to a gym in another building,” he adds. All that has translated into a brand called Postgrad by Hello Student, which provides a hub building with shared amenities, surrounded by satellite accommodation.
Greaves notes that PBSA also needs to be marketed to parents, first and foremost, as the sector’s paymasters. “Their concerns range from health and safety to location factors and pastoral care,” he notes. “The latter includes everything from security to mental health assistance, which we include in training for front of house staff.”
There are also nuances across Europe in terms of parental expectations and preoccupations. Greaves notes that student housing in Italy includes “basement freezers for food packages from families”, while units in the Nordics require saunas, and students in the Netherlands expect bicycle parking. “Many parents will look at the safety index of different cities as a basis for where to send their children. So, locating your property in a safe area also becomes an important criteria for success,” he adds.
Environmental cues
With its purpose-built, often standardised footprints, promoting high density living, PBSA is well known for its elevated profitability per square metre. That same modernity and density can help the sector succeed in certain areas of environmental efficiency, which could further inspire hospitality operators.
PBSA giant Global Student Accommodation (GSA) recently expanded its use of Measurabl, a sustainability data management platform for real estate. The technology enables the property provider to collect quality data, and track and report on sustainability initiatives, including GRESB performance data reporting.
“With Measurabl, we can consolidate data, and gain deeper insights across our assets, helping us to understand consumption and meet certifications,” says Grant Dempster, global head of risk and sustainability at the Dot Group, GSA’s parent company. Outcomes to date include enabling GSA to understand consumption discrepancies and maximise long-term asset value, the firm reports, as well as informing capital planning decisions.
Greaves sees the living sector as a whole offering inspiring models for sustainability to adjacent sectors. In the BTR space, M&G is able to sign green leases with residents, that set out mutual obligations for resource consumption. New arrivals are given welcome packs with advice and reusable cups. “We run community events, drives to collect old clothes, and garden clubs, with the latter proving especially popular in senior living,” he notes. “On an asset level, we work towards BREEAM certification for our properties, and even have a water-source heat pump in the River Avon to serve a BTR asset in Bristol.”
By Isobel Lee
