In need of a bed for the night

PBSA, or purpose-built student accommodation, is still considered a modern alternative asset, but still there can be no doubt that it in Poland is sorely in need of further development. “One significant challenge facing Poland’s higher education system is the acute shortage of student housing. Currently, only about 9 pct of students can be accommodated in university dormitories, which are often outdated and in need of modernisation. There are only 444 such dormitories across the country, offering a total of 115,300 beds – far below the demand. The situation is further exacerbated by the limited capacity of private PBSA schemes, which currently provide just over 13,000 beds, covering only 1 pct of the student population. Even when combined with university dormitories, the available housing only meets the needs of about 10 pct of students,” admits Karolina Furmańska, an associate for the living department at Cushman & Wakefield.

She is not the only one to remark on the lack of supply. As Conall McGuire, the managing director of Leach and McGuire, tells us: “Every student project on the market today is a hundred pct leased. Obviously, there are some vacancies over the summer when all the students go home, but during the academic year they will generally be 100 pct leased.” His company has been involved in the management of PBSA projects for the last seven years. “For example, we are currently managing Trio Kraków for the Van der Vorm Living platform. There are app. 140 rooms in this fantastic project with a good blend of both Polish and international students. Aside from that, we are also in the process of designing and working on other PBSA projects that are now at the building permit stage, so it’s going to be about 24 months before we can begin to commercialise them. There are about 600–800 units in that pipeline.

Getting better all the time

This clear supply gap is further exacerbated by the sheer size of the academic sector in Poland. “Poland is home to one of the largest student populations in Europe, positioning itself as a key academic hub in Central Europe. Despite the decline in student numbers in the recent past, the trend has now reversed, with both domestic and international student populations on the rise. The academic year 2022/23 saw over 1.2 mln students enrolled across 359 higher education institutions in Poland, with more than 105,000 international students – an impressive year-on-year increase of over 17 pct. In cities like Poznań, Rzeszów and Katowice, students make up as much as 20 pct of the population, underscoring the central role these cities play as academic centres,” explains Karolina Furmańska. “This growing demand for student accommodation has made the PBSA market a highly attractive investment opportunity. Private and institutional investors are increasingly focusing on this sector, recognising the significant supply-demand gap. In the coming years, more than 11,000 new beds are expected to be built through publicly announced PBSA projects, with additional confidential projects likely to be brought to market as well. As these developments continue, it is expected that investment in student housing in Poland will grow, offering a viable solution to the country’s accommodation shortfall,” predicts Karolina Furmańska.

The investors arrive

Investors are in fact eager to fill this gap. One such player is Roomies, which last year purchased two student residences in Warsaw and Wrocław from 6B47. “Poland is a very attractive country. There is a huge quality of life, a high quality of education and science, and the price level is lower than in Western Europe. Poland is also getting more and more popular for international students. And the basic conditions for such investment are pretty good, as there is still a huge gap between the supply and the demand for modern student accommodation. In Warsaw, at the moment there are around 1,200 modern units in PBSA locations for more than 240,000 students and 35,000 international students. Of course, over the next five years there will be a lot of PBSA developments in the big cities, including Warsaw. So, we have a lot of belief in this market,” emphasises Nikolas Löbel, the CEO of Roomies. He also reveals that his company is currently focusing on Warsaw, Wrocław, Kraków, Poznań and Katowice, with further announcements to be made once they open their first centres in Warsaw.

And he is not the only one to savour the prospect of a ballooning student population with too little accommodation. “In Poland, a student population of 1.2 mln and growing faces the difficulty of securing places to relax and study amid rising rental costs and frequently substandard offerings, alongside the rare availability in public dormitories. These provide around 112,000 beds, with a few thousand more in private buildings, yet this is insufficient to satisfy the needs of an ever-increasing number of both Polish and international students. Market analysis reveals that a mere 10 pct of students are able to live in the existing student housing stock. This all demonstrates the great potential for the rapid growth of our new platform,” explains Rafał Mazurczak, the COO of Echo Investment Group. The new platform he refers to is StudentSpace, which is also backed by Griffin Capital Partners and Signal Capital Partners. The platform has already secured land for two student residences in Kraków. “To start with, we focused on the two largest academic centres in Poland, where a total of about 400,000 students study. We began our first projects by utilising the available land resources. In Kraków, one of the dormitories is being built as part of the WITA mixed-use complex developed by Echo Investment. It is close to the city’s main universities: the University of Economics, the Kraków University of Technology and Jagiellonian University. The second project is being developed in a rapidly growing, former-industrial part of the city near its University of Agriculture.” However, as big as it is, StudentSpace is not just looking at the student population in Kraków: “We want to launch further projects in other key academic centres, such as Wrocław, the Tricity, and Poznań. We will be prioritising projects that stand out in terms of their accessibility, quality, and sustainability, as well as their proximity to universities,” explains Rafał Mazurczak. Currently, StudentSpace has plans to provide around 5,000 beds.

Changing fast

As Karolina Furmańska of Cushman & Wakefield points out, the market continues to change rapidly: “Over the past two years, the PBSA market in Poland has undergone significant evolution, reflecting both a growing maturity and ongoing opportunities for new entrants. However, this market is still more pubescent than middle-aged. The acquisition of significant assets, such as LivinnX and the prior deal of the entire Basecamp portfolio by Xior, reflects a trend of consolidation, whereby larger, more experienced investors are gaining a foothold and shaping the market. Indeed, while the PBSA market in Poland has seen notable developments and increased investment, it remains far from fully mature. The sector is still going through a phase of growth and adaptation and further consolidation is likely as the market continues to evolve,” she says. Conall McGuire relates how the market has changed since he has been involved in it: “For sure, there is much more competition than before in the student sector. There are many more higher-end, heavily-amenitised student projects being delivered that are not catering so much towards local students but rather with an eye on more affluent international students. Therefore, I think you’ll find that there is still plenty of room in the market for modern, comfortable and most of all affordable student accommodation targeted at local students. Such projects should offer affordability for students and therefore scaleability for investors, so ideally something that is a step above the accommodation provided by Poland’s universities, but also a step below the expensive co-living and PBSA projects that are coming onto the market now. Currently, many investors are choosing to deliver top-end PBSA projects in the hope they will attract students willing to pay top rents. That strategy has worked well enough, but there is limited absorption at the higher end of the market, so I think looking forward we should see a very healthy demand for more modest PBSA offerings,” believes the managing director of Leach and McGuire.

According to Rafał Mazurczak, we should view what’s happening in the PBSA market as part of the general diversification of the residential sector. “The expansion of the entire living sector, which encompasses apartments for sale and rent, dormitories and other residential options, is primarily being driven by lifestyle changes. These include the increased mobility of younger consumers, their willingness to meet their needs through shared or subscription-based models, and evolving family structures. We anticipate that these trends will continue to grow stronger. It’s important to highlight that the current generation of students in Poland now views halls with greater scrutiny, expecting higher standards, innovative design, access to services and entertainment nearby, as well as convenient transportation. These demands reflect broader expectations across the housing market. Gone are the days when a mediocre offering was sufficient for students, particularly in major urban areas,” he argues.

Despite everything, this is not an easy sector. “It’s important to recognise that the PBSA market is operationally complex and subject to numerous factors that impact success. Unlike PRS projects, student accommodation requires greater sensitivity to pricing, as students are more price-conscious. Additionally, the sector faces higher operating costs and is highly sensitive to both micro- and macro-locations. Proximity to universities is critical, but equally important is access to nightlife and essential services, all of which contribute to the overall attractiveness of a student residence,” points out Karolina Furmańska of Cushman & Wakefield.