Student Market Report 2023

In the 2022/2023 academic year, there were a total of 446,000 students enrolled in higher education institutions in Portugal, 78,000 of whom were international students, according to the latest study on student residences by international real estate advisor Savills, “Riding the Wave – Student Housing Accommodation”.  A 3% year on year increase in the number of students shows that, despite the more challenging economic backdrop, families continue to prioritise access to higher education.

With a growing student population (15% in the last five years), demand for accommodation in Portugal continues to rise and is one of the main challenges facing higher education today. Even with the rapid expansion of new projects in Lisbon and Porto, a significant proportion of accommodation available is inadequate for students' actual needs.

Currently, Lisbon and Porto have approximately 12,500 student beds, 58% of which are operated by private operators.

By 2028, it is estimated that around 8,800 new beds will become available, 85% of which will be provided by private operators in various regions of the country. This supply will particularly benefit students seeking access to higher education in the main cities such as Lisbon and Porto. In addition, other locations such as Aveiro, Covilhã, Faro, Braga and Coimbra will also benefit from new private student residence projects.

Compared to other European markets, the student residence market is relatively new in Portugal. Currently, private operators are responsible for operating more than 8,000 beds throughout the country. Companies such as Livensa Living, MILESTONE, Xior, Liv Students and Round Hill Capital are some of the main operators that have already expanded their operations in Portugal.

Alexandra Gomes, Head of Research at Savills Portugal, says: "The figures support a growing purpose-built student housing market in Portugal. The need to bring in an offer that is adjusted not only to student numbers, but also to student requirements is vital if our market is to remain competitive. We have a higher education system that is increasingly recognised in international rankings, but investment from both private operators and public institutions needs to be able to respond in a timely manner to increasing demand."

In Lisbon, the current provision ratio for student accommodation is just 5% according to Savills. With around 131,000 students, the city of Lisbon has seen a 3% increase in the number of students compared to last year, 17% whom are international students, mainly from Brazil and Angola.

For the next few years, the pipeline already under construction exceeds 3,000 beds.

In the Porto market, the provision ratio for student accommodation is 8.2%. In total, in the 2022/2023 academic year, Porto welcomed 71,750 students, 16.5% of whom were international, especially from Brazil and France. By 2026, more than 2,000 new beds are expected in projects developed by private operators.

International investors and operators with a strong presence in other markets are increasingly looking at the Portuguese market. This growing interest in international capital investment in the student housing sector in Portugal has gained prominence, as demonstrated by recent transactions.

For example, in 2022, Round Hill Capital acquired the Smart Studios Portfolio for €200 million, while in 2021, Value One Holding sold the Carcavelos Lombos Residence to the Swedish fund Catella for €15.5 million.

James Snaith, Operational Capital Markets Director at Savills, says: “Portugal’s student housing market is underpinned by strong fundamentals, attracting an increasingly diverse range of investors and operators looking to expand their activity in Southern Europe by entering one of the most resilient asset classes in real estate. There has been a number of high quality transactions in the Portuguese student housing market through 2023, demonstrating investor interest where entry pricing is softer than some other countries, but the fundamentals are as compelling.”

Luís Clara, Capital Markets Associate, Savills Portugal, points out: “While Porto’s student housing market is thriving, with stabilised operational performance and a dynamic transactional market, the reality is that the provision rate remains relatively low, particularly when compared to more established academic cities across Europe. Recent investment activity has proven there is still plenty of capital to invest in Portugal, the difficulty remains accessing available land and projects with attractive risk-adjusted returns.”