Room for opportunities: investing in student accommodation
As the summer slowly begins to fade away, September ushers in the start of a new academic year. This is also a time for real estate investors to look ahead. While the ongoing shortage of student accommodation poses significant challenges for students, it also creates a favourable environment for investors, with low vacancy rates, stable rental income and upward pressure on prices providing ample potential.
Student digs are more than just four walls. They offer an opportunity to realise inflation-proof income and long-term growth.
Sabrina Reynen, Portfolio Manager at KBC Asset Management
The niche market of student rooms is an interesting segment within the global real estate market, with solid underlying fundamentals. A tight supply, combined with an increasing number of students in digs, creates a promising market segment that is growing fast. ‘In recent years, student accommodation has emerged as a dynamic and resilient niche within the real estate market, especially in Europe and the UK. Despite economic uncertainties, student numbers continue to rise worldwide. This ensures stable and often growing demand for student housing,’ says Sabrina Reynen, Portfolio Manager at KBC Asset Management.
Scarcity in the market creates opportunities
The Belgian student housing market has been under pressure for years. Despite the addition of 25 000 new units since 2020, there is still a large structural shortage.
‘By 2030, there will be a need for no less than 70 000 extra student rooms, especially in cities such as Ghent, Leuven, Brussels and Antwerp. The combination of a growing student population - both nationally and internationally - and a slow licensing policy means it is almost impossible for the supply to keep pace with demand,’ Reynen says.
This scarcity translates into rising rents, little to no vacancy and increasing competition among students. The Kotkompas 2025 student housing market survey shows that the average rent in Belgium is around 475 euros per month, excluding bills and other costs. If those costs are included, the figure rises to an average of 575 euros, and in cities like Brussels, it can be as high as 680 euros.
What is a challenge for students is an opportunity for investors.
Sabrina Reynen, Portfolio Manager at KBC Asset Management
And Belgium is not alone in that. By 2024, the estimated shortage of student accommodation across Europe stood at around three million beds. Of course, there are new projects in the starting blocks, but they are expected to cover only 10% of the unmet demand after completion.
Growing demand for better quality
Traditional student housing, like private rented housing, often does not meet students' current expectations in terms of convenience, safety and sense of community. ‘A notable trend we are seeing today is the growing preference for Purpose-Built Student Accommodation, or PBSA,’ says Reynen. ‘These are modern, well-equipped student residences, often off-campus, that not only provide the necessary comfort but also create a sense of community. And that goes beyond 24/7 support and all kinds of social activities. They also often offer better amenities, with things like gym facilities or shared study areas and high-speed Wi-Fi.’
‘International students, who often don’t have a local network, are increasingly - and consciously - choosing this form of accommodation,’ adds Reynen. ‘The demand for PBSA is therefore being further reinforced by the current geopolitical shifts.’ Restrictions in countries like the US and Australia make Europe - and thus Belgium - a more attractive destination for study migration.
Challenges for developers and policymakers
Although demand is high, the supply is lagging behind. ‘70% of Belgian developers take more than four years to obtain a building permit,’ says Reynen. ‘In addition, high construction costs, rising interest rates and stringent standards create additional pressure. Think of things like fire safety or energy performance certificates, for example. Without a step-change in the policy on issuing permits and more collaboration between cities, educational institutions and investors, there is a risk that the shortage will get worse.’
REITs: an accessible investment solution
For investors who want to capitalise on this growing market without having to manage the actual bricks and mortar themselves, Real Estate Investment Trusts (REITs) offer an attractive alternative.
REITs offer numerous advantages. ‘REITs combine the tangible value of real estate with the convenience and liquidity of listed shares, allowing investors to step in or out without the responsibilities of physical property management, such as maintenance or tenant relations,’ Reynen clarifies. By investing in multiple properties and markets, REITs also mitigate the risks posed by vacancy, local legislation or market fluctuations.
‘One of the main strengths of REITs is that they generate consistent rental income,’ adds Reynen. ‘Often indexed to inflation to boot. Many student accommodation buildings are fully let months in advance, providing predictable cash flows for REITs, even in economically uncertain times.’
REITs investing in student accommodation offers the best of both worlds: real estate returns without real estate worries. Moreover, student housing is relatively impervious to economic cycles; even during recessions, students continue to study.
Sabrina Reynen, Portfolio Manager at KBC Asset Management
According to recent market insights, the student accommodation sector in Europe is projected to grow steadily until 2030. ‘Countries like Spain are expected to lead the way with the highest average annual growth in Europe, while the UK, Italy, the Netherlands and Ireland are also expected to show average annual growth of around 5.5%. Germany, France, Sweden, Austria and Poland are expected to grow at a slightly more modest pace of 4.5% to 5%,’ Reynen says. The longer-term attraction of this particular niche within the large real estate sector is additionally supported by several factors:
1. The development of new student housing projects has been and remains the main driver of growth.
The Unite Students student accommodation provider in the UK is a good example, with the more than 930 extra places in Glasgow highlighting the ongoing efforts to expand the supply to meet rising demand.
2. Existing companies are also expanding their portfolios into new markets.
Xior Student Housing in Belgium, for example, acquired student residences in Lisbon and Krakow in the first quarter of 2025, strengthening its presence in these growing markets.
3. Additionally, investing in high-quality, fully equipped accommodation with additional services is proving crucial in attracting students.
Take Xior's ‘Baselife’ concept, for example; it includes round-the-clock support as well as social events organised by ‘student ambassadors’,
and shows how companies are taking the residential experience and perception of students to a
higher level.
For investors looking for an accessible and relatively stable real estate investment, student REITs represent a potentially interesting option within a diversified portfolio.
Sabrina Reynen, Portfolio Manager at KBC Asset Management
‘Investing in student accommodation through REITs offers an attractive combination of stable rental income, potential capital appreciation and professional de-risking,’
concludes Reynen. ‘Nevertheless, it’s important to remain aware of the risks that investing - and specifically real estate investing - entails, such as market volatility or interest rate movements.’
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The information contained in this publication is for information purposes only and should not be considered as investment advice.
