Cushman & Wakefield has released the results of its latest study on the student housing market in Portugal - the Purpose Built Student Accommodation (PBSA) asset class. The study confirms the growing relevance of this asset class in the country, although supply remains below requirements, as in previous years.
Average values per bed continue to rise, although at a slower rate than last year - a reflection of more controlled inflation. Ana Gomes, Head of New Business & Alternatives at Cushman & Wakefield Portugal, says that "the PBSA sector is becoming an increasingly consolidated asset class in Portugal. We are now entering a new phase, clearly moving from a development market to a market of permanent, income-generating assets". However, she emphasises that "it is still far outstripping supply and provisioning rates are still among the lowest in Europe".
Portugal has the highest growth rate of foreign students in Europe
The study, drawn up by Cushman & Wakefield's Development & Living team, also emphasises that Portugal has the highest growth rate of foreign students in Europe, and international mobility is expected to continue to increase demand for accommodation in the coming years, depending on migration policies.
According to the study, there is room for significant growth in the PBSA market, since the rate of provision is still lower than in other European cities. Current estimates indicate the need for at least 12,000 more beds in Lisbon and Porto to bring them in line with the European average.
In the last 12 months, growth in supply in the Greater Lisbon and Oporto regions has been moderate, with around 756 new beds made available in private and public facilities. However, despite more controlled inflation, rents continue to rise at a significant rate, reflecting the huge imbalance between supply and demand.
Compared to the previous academic year, there was an average increase of 8 per cent in prices per bed in Lisbon and Porto. In Lisbon, prices rose between 10% and 11%, while in Porto the increase was 4%. Around 1,500 new beds are expected to enter the Lisbon and Oporto markets during the next academic year, of which just over 300 will be public projects.
With regard to investment in the sector, the average price per bed is between 80,000 and 100,000 euros, with the exception of the Home & Co project, which was transacted at 152,000 euros per bed. The benchmark prime yields for the PBSA market in Portugal remain between 5.25% and 5.75%, unchanged over the last two years.
Licensing delays continue to be a problem
Despite the growth of the market, Ana Gomes warns that "delays in licensing continue to be a problem, especially in the case of some large projects in Lisbon, including relevant public projects. Thousands of new beds continue to be announced by the government, supposedly to be developed with EU funding through the Recovery and Resilience Plan (PRR)".
