Europe Insufficient availability for student dormitories

In Poland, on average, only 1 out of 100 students can expect a place in a modern dormitory. In Europe, app. 15 pct of students can secure accommodation in dormitories. In the capital of Poland, students who opt for accommodation in a private dormitory can save up to 24 pct compared to renting a studio apartment in the institutional rental market. The housing situation for young people in Europe is very similar – student rooms in private dormitories are on average 21 pct cheaper than renting a studio in the PRS.

An analysis of the real estate market in the 20 major European cities conducted by JLL reveals that, after factoring in utility costs, rents for private studios in private dormitories are more affordable than renting a studio in the institutional rental market in almost every market - even in the least budget-friendly cities in Europe. The unmet demand for student beds exceeds 150,000 in London and Paris. According to JLL, in smaller markets such as Berlin and Brussels, unmet demand can reach up to 50 pct of the student population.

The Polish PBSA market is supported by strong fundamentals, including insufficient availability of public dormitories, which still do not meet European standards. Polish students, often with financial support from their parents, are increasingly opting for higher standards of accommodation, especially when it comes to their initial experiences in a new city. To a large extent, the private dormitory sector in Poland is also targeted at foreign students from Western Europe, who value the living standards of their home countries and expect a comparable level of comfort while on exchange programs in Poland. Furthermore, there is a significant inflow of long-term migration from Ukraine in this market, further driving demand for student housing.
Marcin Niemiec, analyst at JLL Living Investments Poland

The key markets where students can save money by living in private dormitories instead of renting in the institutional rental market are Amsterdam (-46 pct), Rome (-40 pct), and London (-37 pct). Only two cities showed higher costs for renting a studio in a dormitory compared to traditional rental, which were Toulouse (+5 pct) and Milan (+3 pct). When it comes to choosing a place to live, price is just one of the criteria for students. Students also value amenities such as gyms, co-working spaces, study rooms, libraries, and game rooms, and they are willing to pay for such conveniences. It's worth noting that in Poland, public dormitories mainly offer accommodation in low-quality shared rooms and do not provide the desired amenities that are present in private student housing.

Poland, with 1.2 mln students, ranks sixth in Europe in terms of the potential market for student accommodation operators, not far behind Spain and Italy, and the potential for the development of the Polish market in terms of unmet demand is 2-3 times greater than in the Netherlands. JLL estimates indicate unmet demand for student rooms at the level of 200,000-400,000 beds, largely driven by a significant number of mobile domestic students who move to other cities for their studies and the growing number of international students. The student housing market in Poland is still in its early stages of development, offering investors opportunities for attractive returns and capital value growth over time.

JLL recently reported that after the summer period, the number of offerings available in projects for institutional rental in Europe has decreased by 14 pct. In cities with a high student population, the decline in the number of available rental properties was even more pronounced: -61 pct in Utrecht, -58 pct in Stuttgart, -40 pct in Brussels, -38 pct in Lyon, and -28 pct in Manchester and Birmingham. As for the Polish market, over the last three years, there has been a noticeable decrease in the availability of rental properties in major cities across the country. This decline began even before the new wave of migration from Ukraine. Compared to the beginning of 2021, today we are witnessing a significant decrease in the number of available properties, ranging from 40-70 pct, depending on the city.

The decrease in supply has not gone unnoticed in terms of rental rates, which have seen significant increases in student accommodation projects in Poland. Over the past three years, the increase ranged from 30 pct to 60 pct, depending on the specific city and project. Warsaw witnessed an impressive 50 pct increase in rents in student accommodation projects. In Łódź, rents increased by app. 30 pct, while the TriCity area saw a 50-60 pct increase. Similarly, Wrocław experienced a significant 30-50 pct increase, and Kraków had a 40-60 pct increase. These figures clearly indicate that the new supply of student housing is unable to keep up with the growing demand.

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.
Dominika Mocova, senior analyst for EMEA Living at JLL

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.
Julia Martin, head of Student Housing EMEA at JLL