The strength of housing need is a relatively ubiquitous story across Europe’s major cities. Despite some years of macroeconomic challenges, demand for the right homes from different demographic cohorts and income groups is set to continue growing apace. Long-term structural tailwinds have combined with short-term cyclical boosts to create a perfect storm for new investment into Europe’s burgeoning living sector.
Student numbers have risen 8.5% over the last decade, with international enrolments (+72%) driving this. Continued growth in higher education enrollment is expected, with 10% more students by the 2027/28 academic year based on positive domestic demographic trends and further growth of international mobility. This demand is not, however, uniform across countries or indeed cities. Markets with multiple high-quality institutions, a growing number of English-taught programmes, and attractive cost profiles (for both tuition and lifestyle) are likely to see a dynamic evolution of demand for purpose-built student accommodation – and create attractive opportunities for building new schemes.
Within the wider private rented sector, long-term trends of urbanization, inbound migration, and stretched owner-occupier affordability are set to continue driving demand for rented residential properties. Cyclical factors may have receded marginally from their recent highs but remain strong push factors driving rental demand. For example, falling interest rates will make owner occupation a little cheaper – but in almost all cities, mortgage costs are still higher than rents – and particularly strong international migration following COVID-19 is now moderating. Nevertheless, household formation is set to remain a strong driver – and particularly for new arrivals to a city, their first dwelling is most likely to be a rented unit.
Source: https://www.mandg.com/dam/investments/institutional/shared/documents/insights/2024/mandgre-global-rea-estate-outlook-2025.pdf