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25 May 20234 minute read

Student housing in the Portuguese market

Student housing has become a billion-dollar industry and there’s no doubt that students will continue to be interested in international education and career opportunities for many years to come.

The ease of travel and obtaining visas, and the increase in international education incentive programs, like the Erasmus program, have given millions of students the chance to study in another country.

The OECD expects the number of international students to exceed 8 million by 2025, when higher education is set to become a USD70 billion industry.

As a result, more real estate investors are interested in this sub-sector of the real estate market. And cities have started working hand in hand with universities to provide better accommodation to attract and retain students from all over the world.

The competition is massive and the students who want a successful career are pushed to have an international experience. European cities need to adapt to the increasing demands and wishes of international students.

Portugal is considered an emerging market in Europe and investors are now turning their attention to it.

The number of international students in Portugal increases every year. This trend is because of the country’s quality of life, climate, safety, gastronomy, and internationally qualified universities.

The country has a very high English proficiency level – it’s ranked seventh in the EF EPI.1 This makes it easier for international students to adapt and helps to attract a wider range of nationalities.

Ranked sixth in the 2022 Global Peace Index, Portugal offers both stability and a high standard of living, especially for the younger population.

Portugal is also ranked number 32nd in the Global Innovation Index, an annual ranking that measures a country’s capacity in terms of its institutions, human capital and R&D, infrastructure, market and business model sophistication, and the creation of new knowledge, technology and creative output.

The status allows Portugal to take advantage of its popularity, attracting an increasing number of foreign residents, investors, and international students.

For this reason, government institutions and universities have tried to implement strategies focused on the internationalization of education. The government, universities and AICEP (Portugal Global – Trade & Investment Agency) are developing a national policy to promote education as an export sector, with all entities working in the same direction. The group is making efforts to attract international investors to develop student accommodation.

From 2015 to 2021, there was an increase of 55.5% of international students in Portuguese universities, causing an abrupt change in the demand for student housing accommodation. At the beginning of 2022, Portugal had a total of 411,995 students, of which 14% were international.

But the Portuguese market hasn’t been able to keep up with this trend. There’s a lack of accommodation and the need to improve the existing ones, creating more modern and adequate accommodation to meet the students’ needs.

Known as PBSAs (Purpose-Built Student Accommodation), this type of accommodation offers privacy while at the same time it promotes socializing through its services (gyms, study rooms, social areas) among students.

This type of accommodation differs from student residences or traditional leases since it offers higher quality and a range of services and facilities to students. It’s common to find laundry rooms, gyms, swimming pools, common areas, and study rooms in PBSAs, which enhance the student experience.

The provision rates in Lisbon and Porto are still below the European average. The PBSA supply is around 6,000 beds between Lisbon and Porto, and other important academic cities such as Coimbra, Braga, Aveiro, Évora and Covilhã have little or no purpose-built accommodation.

A significant portion of the market is still supplied by traditional apartments that are on the conventional rental market. In Lisbon and Porto, the current supply rates were estimated at 4.3% and 7.5% respectively.

This is where international developers find opportunities to invest, taking advantage of the shortage of supply in the student housing market. There’s currently a pipeline of approximately 8,000 beds expected to be delivered by 2024.

The increase in the number of pipeline projects reflects the dynamism of the sector, which now extends beyond Lisbon and Porto to locations such as Coimbra, Braga, Aveiro, Évora and Covilhã.

In the next few years, more than 4,000 beds are planned for Lisbon and more than 3,600 beds for the Porto market, promoted by private operators.

The future looks bright and although there are several projects in the pipeline from international developers and operators, there’s still room for further investment as demand is much higher than supply. There’s an excellent market opportunity in the student housing market in Portugal in the coming period.


1 (EF English Proficiency Index)
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