BONARD Blog Series #4: PBSA Q2 2022 Outlook
In our latest edition of the BONARD Blog Series focused on private purpose-built student accommodation (PBSA) market, we look at the latest developments from Q1 2022 and their impact on Q2 2022.
The previous quarter has seen major capital deployments in the market.
Investors’ ongoing interest in the student housing asset class was confirmed by several significant transactions concluded or proposed at the end of 2021. BONARD’s daily monitoring of the latest trends reveals investment momentum also continued through Q1 2022.
In terms of challenges, rising inflation and higher commodity prices have been pushing up the capital expenditure levels for construction costs, FF&E and labour globally, but it is too early to assess the impact, if any, of the ongoing conflict in Ukraine on investment appetite within and/or outside the CEE.
Based on current data and insights, BONARD expects the following trends for Q2 2022 and/or later:
Certain trends in the portfolio strategy approach of established stakeholders within the student housing asset class give a snapshot of market sentiment.
Two approaches are anticipated:
The growing mobility of students, young professionals and other relevant cohorts is expected to have a positive effect on development in the rented residential sector into 2022. The profitability of development in this asset class might decrease due to rising inflation, though it is thought that the trend will be temporary.
In this regard, increasing rent levels seem to be one of the key tools to balance the expenditure vs profit gap. Achieving this balance and staying competitive will require stakeholders to professionalise their PBSA services as well as to offer an attractive product.
To end these insights on a positive note, we can disclose that BONARD is preparing its regular annual rent level update with predictions that in September 2022, some geographies will see double-digit growth in rent levels over 2021.
BONARD Research Team:
Chief Intelligence Officer
Rented Residential Director
Head of Strategic Intelligence
Read more on student housing in our latest Student Housing Annual Report 2021 here: