Investors from Co-Liv, JLL, Value One Development International, Stoneshield Capital, and Hines discussed unique opportunities in Iberia (Spain and Portugal) despite macroeconomic challenges such as inflation, interest rates, and geopolitical uncertainty.

Emerging Eurozone PBSA markets quickly catch up with mature markets, but face operational challenges

January 2, 2024

SHURE Initiative
Southern European PBSA markets may be growing and catching up to the more mature northern markets, such as the U.K., but face operational challenges. Indeed, the tide is coming in for opportunities in southern European markets such as Spain, Portugal, and Italy. Most Eurozone investors combine Portugal and Spain, defining it as the Iberia market.

“Both Spain and Portugal have been the best performing economies in Europe in terms of GDP growth, inflation rates and unemployment trends,” according to Pablo Lopez-Bravo, Acquisition Manager at Luxembourg-based Stoneshield Capital.


“I think there are three markets in Europe that can still grow, which is Iberia, Italy, and Poland because those are markets with, you know, several cities where you have large student numbers and low provision rates,” said Pablo Lopez-Bravo, Acquisition Manager, Stoneshield Capital. “So I expect this growth story to continue over the next decade.”

Ibera’s population centers, such as Madrid, Barcelona, Valencia, and Lisbon, are among the top 10 international destinations for students. With low capital costs, high-quality education systems, and surging international student demand, regional investors in Spain and Portugal are now seeking outside equity to grow their PBSA businesses.

“Real estate work has become more complex and requires a specialization and particularly those assets where there is an operation behind,” said Silvia Damiano of JLL at SHURE on 10 October.

Silvia Damiano, Head of Valuations Southern Europe, JLL Valuation & Risk Advisory, said she is being cautious due to current macroeconomic conditions but said there is appetite for PBSA because of solid fundamentals. “If you look at first of all, there is a gap between the supply and the demand, so there is immense demand,” Damiano told the SHURE audience. “There’s a huge opportunity of demand to be covered.”

Lopez-Bravo said he couldn’t agree more with Damiano. “PBSA in Iberia is massively undersupplied and is a very defensive sector because of its counter-cyclical nature during downturns. It is naturally hedge against inflation,” said Lopez-Bravo.

Benefiting the PBSA sector in Iberia, the Spanish and Portuguese governments support a robust education system through any economic climate or crisis. PBSA will be supported by the governments in Iberian countries, no matter the macro challenge.

While based in Austria, Sebastian Gruber of Value One first invested in Portugal. Gruber is bullish on the Iberian peninsula but notes that the pace of recent interest rate hikes has caused construction projects to become more expensive and cut into profits.

“One of the reasons why we like PBSA so much is because of this natural hedge against inflation. PBSA combines one of the beauties of commercial properties like hotels where you can set the new rate every night,” according to Gruber.

Parents wants secure housing for their kids, according to Marc Sampietro of Hines. “And if you ask parents for sure, they will ask for security and cleanliness after COVID.”

Marc Sampietro, Head of European Living Operations at Hines said that the PBSA, while initially more popular in Northern European markets, such as the U.K., is becoming more famous in southern European countries, such as Spain, Portugal, and Italy.

With this rapid growth in southern European markets and the influx of international students comes challenges in the operational side of the business. Sampietro of Hines suggested a unique challenge in operating PBSA in these rapid growth areas. “I would say the biggest challenge from an investor’s point of view, if you ask me as an operator, is the day-by-day operation to manage those 700 to 800 students simultaneously.”

The investors said they also explore secondary markets for new opportunities, moving beyond the big cities. The SHURE session was moderated by Virginia Perez Nieto, Director of Strategic Partnerships and Business Development, Spain ambassador at Co-Liv. The SHURE event was held on 10 October in Zürich.

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