Credit: GRI Club Beds: Overcoming squeezed margins amid soaring funding and construction costs
With PBSA on top and co-living coming up fast, investors tackle feasibility of new projects with creative financial structuring
July 29, 2024Real Estate
Written by Helen Richards
One of the most notable trends observed during discussions among leading market players at GRI Beds Europe 2024 was the increasing flow of institutional capital into European residential sectors, marking a significant shift in focus towards residential living sectors over the past five years.
In-depth takeaways from the discussions are available in the exclusive GRI Beds Europe 2024 report.
Discussions addressed the varying sub sectors within Beds, revealing keen interest from investors towards Purpose-Built Student Accommodation (PBSA), which is seeing a significant amount of capital enter the sector, driven not only by the attractive operational model offering extra yield and income, but also due to its undersupplied nature and attractive clientele - namely less price sensitive international students.
Meanwhile, the co-living sector in Europe is emerging as a promising yet complex area. A living transformation is gaining traction and the demand for urban, flexible, well-designed living environments that offer communal amenities and hassle-free move-ins is growing, but scalability and institutional investment remain as hurdles.
One of the most notable trends observed during discussions among leading market players at GRI Beds Europe 2024 was the increasing flow of institutional capital into European residential sectors, marking a significant shift in focus towards residential living sectors over the past five years.
In-depth takeaways from the discussions are available in the exclusive GRI Beds Europe 2024 report.
Discussions addressed the varying sub sectors within Beds, revealing keen interest from investors towards Purpose-Built Student Accommodation (PBSA), which is seeing a significant amount of capital enter the sector, driven not only by the attractive operational model offering extra yield and income, but also due to its undersupplied nature and attractive clientele - namely less price sensitive international students.
Meanwhile, the co-living sector in Europe is emerging as a promising yet complex area. A living transformation is gaining traction and the demand for urban, flexible, well-designed living environments that offer communal amenities and hassle-free move-ins is growing, but scalability and institutional investment remain as hurdles.
Discussions kicked off with a plenary session from key market players, asking what is driving the increase of capital into the residential market.
(Image: GRI Club)
(Image: GRI Club)
Over the past year, building costs have surged, pushing the financial viability of new residential developments to its limits, while the gap between the cost of debt and rental yields presents a formidable obstacle. The result - many projects stalled or abandoned amid an ongoing structural under-supply of housing.
Bridging this funding gap requires creative financial structuring and a willingness from all parties to adjust their expectations, while driving value in residential investments through operational expertise is proving increasingly necessary.
Discussions also addressed the fast-evolving hospitality sector, and more specifically the cross-pollination of ideas and practices between the hospitality and living sectors. A hybrid model is gaining traction as lifestyles become more dynamic and the need for flexible living solutions grows.
This integration goes beyond the spatial design and product on offer, it involves the potential for significant operational improvements, driven by technology and data analytics, with significant lessons to be learned from both sectors.
Read the full GRI Beds Europe 2024 report for complete access to exclusive market player insights.
Bridging this funding gap requires creative financial structuring and a willingness from all parties to adjust their expectations, while driving value in residential investments through operational expertise is proving increasingly necessary.
Discussions also addressed the fast-evolving hospitality sector, and more specifically the cross-pollination of ideas and practices between the hospitality and living sectors. A hybrid model is gaining traction as lifestyles become more dynamic and the need for flexible living solutions grows.
This integration goes beyond the spatial design and product on offer, it involves the potential for significant operational improvements, driven by technology and data analytics, with significant lessons to be learned from both sectors.
Read the full GRI Beds Europe 2024 report for complete access to exclusive market player insights.
