Student housing surpasses multifamily as highest-priority target sector

Student housing has surpassed multifamily residences as the most sought-after sector for European real estate investors focused on operational assets.

Student housing Poland

This is the conclusion of a Savills survey of investors managing nearly €720 billion in assets. 
While student housing remained a top priority for investors polled (62%), interest in multifamily dipped significantly (57% compared to 84% last year). 
Other growing sectors include single-family rentals (41%), senior living (41%), co-living (35%), and care homes (35%). 
Budget hotels are also gaining traction due to the travel industry's rebound in 2024 and expected growth in 2025.
The UK and Ireland remain the most attractive markets, followed by Southern (Italy, Spain, Portugal) and Western Europe (France and Benelux) over the next three years. A growing number of investors (16%) are pursuing pan-European strategies. 
The preferred investment approach has shifted towards core-plus strategies (41%), followed by value-add (30%), suggesting a potential market recovery in the near future.
Marcus Roberts, head of Europe - Savills Operational Capital Markets, says: “Our survey reveals that respondents are looking to invest c.€50 billion over the next three years into Operational Real Estate (OpRE). The majority (73%) of this capital is targeting the Living sectors, with multifamily (€8.1 billion) and PBSA (€7.4 billion) expecting to see the greatest inflows of capital.”
Richard Valentine-Selsey, head of European Living Research & Consultancy at Savills, commented: “The vast majority of respondents, almost 90%, agree or strongly agree that demand for ESG-compliant OpRE assets will increase over the next five years, while the biggest barriers to increased ESG adoption are higher construction costs, lack of clear ESG regulations and enforcement and the difficulty in measuring ESG impact.”
Charlie Bottomley, director, Savills Capital Advisors, Debt Advisory, added: “We continue to see robust liquidity across both bank and non-bank channels, driven in part by the continued low level of transaction volumes. With fewer deals in the market, lenders are competing intensely for opportunities, particularly in the OpRE sectors, which remain a top priority for most capital providers.”
Harry de Ferry Foster, director at Savills Investment Management, said: “As the most mature subsectors in living, we would expect to see European PBSA and multifamily anchor institutional OpRE portfolios – especially in a countercyclical macroeconomic environment. Equally interesting is the deepening demand for exposure to nascent asset categories like senior living, co-living and care; reflective of a broadening base of opportunities available to investors in living, but also growing market sophistication.”