Spain is solidifying its status as a prime destination for student housing real estate investment, ranking as the second most preferred market in Europe for investors in purpose-built student accommodation (PBSA), just after Italy and ahead of Portugal. According to new data from Savills, investment in student residences across Spain, Italy, and Portugal surged to €1.7 billion in the first nine months of 2025—nearly triple the €570 million recorded during the same period in 2024.
Student Housing Boom in Southern Europe
Southern Europe is now the clear favorite for investors targeting PBSA assets. A recent study by Savills UK and The Class Foundation shows that 19% of surveyed investors picked Italy as their first choice, while Spain attracted 11% and Portugal 10%. This represents a shift from previous years, as interest declines in more established markets like the UK.
The robust growth reflects Spain’s ongoing appeal to both domestic and international students. With demand outpacing supply and low bed provision ratios, experts predict these countries are “key markets for growth” in Europe’s student housing sector. In fact, Savills research now finds that student accommodation is the top choice for 62% of living investors, overtaking the previously dominant multifamily asset class.
Investment and Expansion Plans
Investor appetite shows no sign of slowing. The recent Savills survey included 18 major investors and operators holding about 136,000 student beds worth over €18.8 billion across Europe. Within five years, these players expect to add roughly 97,800 new beds—a 72% increase—requiring an additional €20 billion in investment.
If these trends continue, Europe’s student bed provision ratio could rise from the current 14% to 18%, helping to address an acute shortage. Savills estimates that the continent still needs 3.1 million more PBSA places to meet demand, with approximately 40% of the current stock in private hands.
Challenges: Regulation and Construction Costs
Despite the optimistic outlook, the sector faces notable challenges. Regulation tops investor concerns, with 100% of survey respondents expressing worry about potential regulatory hurdles—an increase from 81% in 2024. Construction costs and limited land supply also remain barriers to accelerating new developments.
Industry experts call for strengthened cooperation between developers and financiers to overcome these obstacles and sustain growth. “There could be regulatory barriers to a significant increase in stock in the near term,” notes Savills.
Looking Ahead
With southern Europe leading the way, Spain is firmly positioned as a growth hotspot for student housing investment. While challenges persist, rising international student numbers and undersupplied markets are fueling unprecedented interest—and potentially transformative change—in Europe’s PBSA landscape.
For more insights on student housing markets and real estate investment opportunities in Europe, stay tuned to our latest updates.
