During the past decades, the Portuguese student housing market and higher education system can be described as stagnated, underinvested in and far from achieving a prestigious international outlook. The inflow of international students mainly originated from Portuguese-speaking countries such as Brazil, Angola and Cabo Verde, while the latest figures showed a slight decline in overall higher education enrolments of nearly 5% during the last 8 years. As of now, there are 119 higher education institutions in Portugal hosting a total of 356,399 students, of which nearly 68% are enrolled in the 15 top-ranked HEIs.
Investors faced low confidence and high risk in funding and developing local student accommodation; as a result, students were hosted in older, shared apartments, with most student houses being shared by 5 to 6 people.
Over the last 3 years, Portugal has begun to recover investor confidence, and the numbers of international students to the country has rapidly increased. Currently, there are only a handful of PBSA providers in the Portuguese market including Nine Student Living, Doorm Portugal, and Smart Studios. These providers are rather small, either with a single location or several smaller ones. Moreover, in line with the successes of schemes mixing different resident types together, StudentVille has invested into a hybrid student residence-hotel model in Lisbon.
At the same time, Lisbon is being lauded as one of the fastest emerging capital cities of Europe. The comparatively low costs of living allows European student housing investors to grasp the opportunity of expanding their business within the country. This also benefits the local real estate market as it recovers, providinG opportunities for local and international students through a higher availability and affordability of student accommodation. In 2017, we have seen a high inflow of outside investors and operators such as Milestone, MPC Capital, Round Hill Capital and Colegiate AC, showing a growing interest in the country.
A rapid increase in PBSA developments
German real estate company MPC Capital plans an investment of €100 million in developing student residences in Lisbon, Porto and Coimbra, having already purchased their first parcel of land in Lisbon. A new luxurious student accommodation, Collegiate’s first project outside the UK, will be ready to accommodate new students from January 2018 in Marquês de Pombal, Lisbon. The property includes an on-site cinema, private fitness suite, private party rooms, and a library. Lastly, 1,200 additional student residences are also under development in the city of Porto, where the British investors Round Hill Capital and the Saudi investment fund MEFIC Capital have acquired a plot of 78,000 m2 for €100 million.
Following the latest trends in the student housing market, Uniplaces claims an increase in rental rates by 10% in Lisbon and by 3% in Porto since 2016, with an average student rent at €415 per month. At the same time, the latest research on student housing preferences shows that students prefer Lisbon as a destination and are prepared to pay higher rents to be there.
A milestone in competitive higher education
In addition to expanding the availability and affordability of student accommodation, Portugal currently focuses on developing world-class student facilities to meet new European expectations. The development of Nova SBE’s new campus in Carcavelos is another step towards quality and international recognition in Portugal’s higher education, as well as a vital advancement for talent attraction. Nova SBE’s ambition is to create a top-class school of economics and management that offers an attractive and modern place for students with the goal of climbing to the top 10 in the European rankings. Indeed, Nova SBE has climbed up 5 places in the Financial Times European Business Schools Rankings since last year, and is expected to increase its competitiveness even more in the future.
According to the latest research by Times Higher Education, the Governmental provision on tertiary education in Portugal reaches 1.4% of national GDP (17% of total spending on education), while the enrolment rate is accumulated at 61.87%. To raise the enrolment rates of international students, the prime minister assures EU rights to British students in Portugal after the Brexit process, and the Portuguese Institute of the Orient has launched new, local support offices for international students.
By Andreas Chrysanthou and Manu Moritz, for The Class of 2020