The meteoric rise of coliving and PBSA in Portugal

Portugal has grown much more as a destination for real estate capital in the last few years. With the launch of SIGIs and growth of the regions secondary cities, there has been a lot more appetite for both foreign and domestic investment. With some markets beginning to saturate, investors are starting to look into alternative options. One of the current favourites is centred in the rise of coliving and student housing in Portugal. 

This was discussed at a recent GRI Club Portugal meeting, where the countries leading real estate players gathered for collegial and informal conversation on the most pressing issues in real estate. Acknowledging that a lot of them had been looking at different types of residential and commercial alternative assets as a potential opportunity, members talked about the strengths and pitfalls of the growing sector. 

When we talk about co-revolution, it refers to a wave of working together, living together, and generally integrating our daily lives with the community. The co-working boom as been happening for quite a few years now in Europe, to the point where people looking for jobs in modern company’s often expect co-working and all of the benefits that come with the model.

It began merely to offer startups and self-employees with cheap and flexible spaces, but now it’s the primary way that corporations look to operate due to their flexibility in space, contract and social interactivity. 

We’re now seeing this same trend happening in residential. It’s only in the beginning of what may be a massive shift in the way we live, so we’re yet to see the full gravity of it. What can be said though, is that what started as people looking to live together to save costs might now be turning into a legitimately popular option as people enjoy the social interaction and community feel.

For the first time ever, we have almost an entire generation going through university and therefore student housing. Across Europe, there is an average of 6 times more people going to university today than in 1980. That means 1 in 4, 25 year old’s have already lived in some form of co-living for at least 2 years (University Europe, 2014).

What we’re also seeing across Europe is a large percentage of young adults not being able to afford their own home in the cheapest area of their hometown with a 10% deposit, i.e. this percentage reaches 40% of all under 25s in the UK (BBC, 2018). So co-living and student housing is way, way more fiscally achievable. 

Despite this huge demand, one struggle that international and local investors are finding in Portuguese student housing market is the municipality’s regulations, such as parking requirements. These minimum requirements are seen as counterproductive and hurt the margins enough to hinder growth. Operators are actually saying they struggle to innovate because of how limited by regulation they are. 

Co-living is definitely a growing and exciting sector. Especially with student housing, there's no question that they’re sustainable and lucrative. What remains to be seen is whether or not regulation will ease enough to let the asset class truly bloom. 
 

For more information on alternative residential assets across Europe, GRI Residential Europe takes place on the 26th and 27th November in London. If you're interested in learning more about real estate from some of the most important figures active in the European market, the Hub's exclusive interviews from Europe GRI can be found on the GRI Club YouTube Channel.