Team Domatia entered the Italian PBSA market in 2017, seeking deals in historic, high-barrier-to-entry markets, a 'complicated exercise, but worth it.'

Now’s the time to be looking to buy Italian PBSA, according to William fforde of Domatia: “We wouldn’t be creating this fund if we didn’t believe it would work”

December 4, 2023

SHURE Initiative


Veteran developer-investor William fforde, a founder of UniLodge, the U.K.'s first nationwide independent chain of direct-let student accommodation sold in 2001, freely admits that his hair is greying. Today, William and his Domatia colleagues are meeting the challenge of acquiring unique historical and notable buildings in Italy and converting them to PBSA.

"As my hair shows, I'm a seasoned operator in this sector," fforde told the SHURE audience in Zurich on 10 October. "Between us over the past 30 years, we have acquired, developed, and operated well more than 20,000 PBSA units."

William fforde of Domatia. "Have we succeeded? Sir Christopher Wren's epitaph says, 'si monumentum requiris, circumspice' (i.e., come and see our buildings: if you want a memento, look around you – and they are fully let!)."

A PBSA investment and development firm with extensive experience in the U.K. and Europe, in 2020, Domatia acquired two buildings in Florence: a former clinic and an office building. The first, S4 (111 beds), opened in September 2022, and the second, Il Santo (220 beds), in May 2023. New York University has leased the beds.

Internal of communal area of Domatia's S4.

Domatia is investing in Italy primarily because the market has the potential for the growth of the U.K. market over the past 25-30 years. Domatia is setting up a fund starting at $150m with their financial partners for future investment into the Italian PBSA market. "We are now looking at more opportunities in Florence and also developing in other places in Italy," according to fforde.

Team Domatia worked for the better part of three years and encountered a couple of misfires to get into a position where investors and purchase opportunities lined up. "Patience, persistence, and having strong local partners in Italy are essential: our second building in Florence opened almost seven years after we started."

Florence is a desirable and attractive market for American students. The number of students in Florence has increased. As such, Domatia identified an opportunity to buy properties in its UNESCO historic center.

"If one goes into an old part of, in Florence's case, a very famous Italian city, it's quite difficult to find people who are prepared to sell properties of the right size to you," fforde recounted. "And, of course, the assets must also work for planning purposes; so it's quite complicated."

Working with the locals in Florence was critical to Domatia's success as a U.K. firm entering the market. "We went into Florence with a couple of contacts and built a comprehensive professional team without whom we would never have stood a chance." fforde said it's important to know people who have the right connections at the ground level.

While several have looked at acquisition opportunities in Florence, only some have succeeded.Domatia is also attracted to the Italian market due to its high quality of education.

"The top 15 universities in Italy are in the top 500 universities in the world, and the top five universities in Italy are each in different cities," according to fforde. "That just gives you a sort of idea of the quality and Italy is now the top choice worldwide of U.S. international students."

fforde said he was looking to bring a top-level product to Italy to meet the demands of both international and domestic students in an economically attractive country. This strategy was exemplified by the two buildings Domatia has opened in Florence, thanks to its talented team of architects, interior designers, engineers, and project managers, supported by lawyers and accountants. "Our target was as near as 4-star hotel rooms as the regulations would permit, with all the added facilities students expect, including gyms, cinemas, games rooms, kitchens, and spacious study areas, crowned by terraces with amazing views of the historic landmarks of Florence."

Regarding borrowing debt for new projects, fforde noted that Domatia's experience has been challenging in the development phase of a project, but it is possible. Banks move slowly, according to fforde, with the total transaction time around one year, perhaps six months for established firms. "We did succeed, but it is very, very difficult."

fforde suggested that investors look for an international bank with an Italian branch in Italy. In this scenario, the due diligence requires only three months.

As for the future of Italian PBSA, fforde pointed to a few challenges in the Florence market inlcuding and upcoming mayoral election. He said it would be a mistake to mix politics with investment because the investments are long-term, and politics can be short-term. "It's essential to be aware of what's happening locally, have good contacts and understand that politicians can threaten to change the rules for electoral purposes, sometimes regardless of constitutional tenets."

fforde concluded his remarks in a reassuring tone. "Some people listening might think that I've been trying to put everyone off Italy because it is so complicated, but we wouldn't be doing this, setting up a new fund and all of that if we didn't believe that it is a great place to invest - and the fund will take the hassle out of it for our investors."

fforde reminded the audience that Italian PBSA is in its infancy. "Look at what's happened in the U.K. in the last 20-25 years – other countries have followed with similar trends of significant growth."

Italy has relatively low personal debt, meaning many properties are owned by people who do not have to sell. They may perceive a particular value for their land and stick with it. "Don't assume that everyone will sell tomorrow," he said. However, some will, and the PBSA market in Italy is beginning to become well-established, especially in the north. "As long as a new product is delivered, it's inevitable that the student demand will follow and investors will be there because the response to that demand will mean there is something worth investing in."

fforde concluded with a note of timing and optimism. "With yields rising and inflation falling, now's the time to look into buying; economists tell us that interest rates are near their peak in the current cycle and should drop in 2024."

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