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Executive Summary

What was once a niche segment of real estate has become a focal point for investors, with the living sector now at the forefront – driven by shifting demographics, evolving societal needs, and rising urbanisation, all of which have fundamentally redefined how people choose to live.

The living sector’s footprint is expanding across Europe, with investors reinforcing the sector’s role as a strategic pillar within an evolving real estate landscape.

Across Europe, a combination of macroeconomic and societal shifts is propelling this momentum. These include concerns around homeownership affordability, new traveller behaviours such as the rise of “bleisure” travel, and a growing cohort of mobile professionals and international students. The living sector’s footprint is expanding across Europe, with long-standing hubs like the United Kingdom (UK), France and Germany providing a solid foundation, and growing interest now emerging in countries such as Spain and the Netherlands.

Investors are reinforcing the living sector’s role as a strategic pillar within an evolving real estate landscape, marked by increasing allocations to living assets and a growing volume of large-scale deals. This shift is opening long-term opportunities across Europe’s living assets such as the private-rented sector (PRS), coliving, purpose-built student accommodation (PBSA), serviced residences (SR) and hotels.

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Key Highlights:

Rapid Transformations in the European Living Sector

Institutional investors are recognising the European living sector's potential as a cornerstone of diversified portfolios, offering stable, and attractive long-term returns. Investor appetite is expected to remain strong, as supply constraints continue to underpin returns across strategic markets.

Across key European cities, structural undersupply of modern living spaces and soaring rental demand are fuelling unprecedented investment opportunities. High-growth subsectors, including PRS, coliving, and PBSA, are at the forefront of this transformation.

Meanwhile, the demand for hotels and SR is experiencing a resurgence, propelled by Europe’s post-pandemic recovery in both leisure and business travels.

Overall, the living sector offers investors an unique opportunity to deploy capital into structurally supported, forward-looking asset classes that are aligned with social needs and long-term economic resilience.

Europe is a Market of Scale, Maturity and Emerging Opportunities

The European living sector is anchored by major markets such as the UK, Germany and France, followed by Spain, the Netherlands, Sweden, Italy, Denmark, and Switzerland. Figure 2 highlights the three core markets (the UK, Germany, France) alongside the top two emerging markets (the Netherlands and Spain), with the UK remaining the most liquid market owing to its consistent appeal to global capital. These five markets exhibit strong housing demand from students and tourism.

Key Drivers Fuelling Resilience and Growth in Europe’s Living Sector 

1. RISING COSTS, SHRINKING OPTIONS AND SHIFTING DEMOGRAPHICS

Homeownership in Europe has become increasingly unaffordable, pushing more people towards rentals. From 2015 to 2023, house prices rose 48% across Europe, with the Netherlands, Germany, Spain, and France all seeing similar surges¹. Housing supply has also lagged demand due to rising labour and raw material costs, regulatory hurdles, and planning delays.

Against this backdrop, demand for flexible and lower-cost housings is growing. Coliving has emerged as a cost-effective, socially engaging option - often cheaper than renting a studio or one-bedroom flat, especially when shared utilities and amenities are considered². It also helps address rising urban loneliness as household sizes shrink across Europe³.

Between 2013 and 2023, the number of single-person households without children in the EU grew by 21%⁴, highlighting demand for housing that combines privacy with community. For many aged 25 to 59, coliving offers an appealing mix of affordability, convenience, and social connection in a changing urban landscape⁵.

2. THE DIGITAL NOMAD BOOM

The rise of remote work post-COVID has created a new generation of digital nomads who prefer extended international stays, fuelling demand for flexible, long-term accommodation. European cities make up over half of the top 10 destinations for digital nomads, including London, Berlin, Lisbon, Paris, Barcelona, and Amsterdam⁶.

Increasing regulations on short-term rentals in key cities have reduced availability and affordability⁷. In response, serviced residences and coliving properties managed by professional operators have gained traction. These provide cost-effective extended stays with communal amenities, shared workspaces, and built-in social communities, especially attractive for newcomers seeking to build networks⁸.

3. ADAPTING TO NEW TRAVELLER TRENDS AMID SOLID RECOVERY

Tourism in Europe is rebounding strongly post-pandemic, with London and Paris among the world’s top 10 most visited cities, drawing 21.7 million and 17.4 million international visitors in 2024⁹ respectively. Visitor spending in the EU hit €1.4 trillion in 2023, matching 2019 levels. This surge has fuelled strong hotel performance, with occupancy. Europe’s business travel spending is also expected to grow from €360 billion in 2024 to €561 billion by 2028¹⁰.

There is also the rise of “bleisure” travel - extending business trips with leisure days - is driving demand for longer-stay options like SR and coliving. European markets are already seeing longer average stays compared to 2019, led by the Netherlands with a 16% increase¹¹ in trip lengths.

4. GREATER DEMAND FOR STUDENT ACCOMMODATION 

Europe’s growing student population is boosting demand across PBSA, PRS, and coliving sectors. Asian students form the largest international cohort, a trend likely to continue. As the United States (US) and Australia tighten student entry, continental Europe is poised to absorb redirected demand¹².

Investor interest in PBSA remains strong, with bed supply expected to grow 70% over the next 2-5 years¹³. Yet, supply remains critically short. This PBSA shortage spills over into PRS and coliving, intensifying the supply-demand imbalance for traditional renters. Addressing the gap requires stronger government support to help private developers overcome financial and planning hurdles – targeted incentives and streamlined approvals are key to unlocking new supply¹⁴.

Living Assets Leading Recovery

The living sector led Europe’s real estate recovery in 2024, with investment volume up 49% YoY, outpacing all other sectors. Compared to 2023, investments surged by 38% in PRS (including coliving), 32% in PBSA, 85% in Hotels, and 77% in SR, driven by the post-pandemic travel rebound and heightened investor demand for recession-resilient products like PRS amid global uncertainty (Figure 3).

Future Outlook - Adaptive Strategies & Sustainability 

With rising debt and construction costs, the trend of investors prioritising refurbishment and conversion strategies to maximise value is expected to continue. This is also in line with the growing demand for a sustainable and responsible investment approach. Furthermore, beyond the useful life of the existing usage, the option to convert non-residential living assets into residential use, subject to authorities' approval¹⁵, enhances the sector’s investment flexibility and strengthens its value proposition.

The line between SR and Hotels is increasingly blurred. Operators are also blending PBSA, PRS and coliving to create “Flex buildings”, targeting a broader rental demographic by offering fully flexible leases. Conversely, many coliving properties also serve students either on a permanent or temporary basis while they are waiting to finalise their longer-term accommodation. There are also expectations that coliving might be the solution to Europe's housing crisis¹⁶.

On the sustainability front, Environment, Social, and Governance (ESG) regulation will increasingly continue to influence decisions about energy efficiency, resource use and sustainable construction for living assets. Tenants and guests are having greater expectation for sustainable living and hospitality options while investors have prioritised ESG-compliant assets to future-proof portfolios. Integrating sustainability principles is no longer optional but essential to stay competitive and compliant in the evolving European market.

Investors are increasingly drawn to the European living sector due to its resilient demand fundamentals and long-term growth potential. Post-pandemic market dislocations, particularly in hospitality, have opened up more value-add and repositioning opportunities, creating a compelling play.

Forward-thinking investors and operators now lead this transformation, crafting innovative models that seamlessly integrate student housing, coliving and residential apartments while strategically reimagining hotels and serviced accommodations through thoughtful refurbishment and purposeful conversion.

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^{Notes
[1] House prices of the Netherlands, Germany, Spain and France rose 83%, 49%, 48% and 31% respectivey between 2015 and 2023. Source: Eurostat, January 2025. 
[2] In London, on average, coliving rents are 7% lower than all-in cost of living in other PRS and 14% discount to multifamily homes. Source: Knight Frank – “The Co-living Report”, 2024.
[3] On average, 13% of respondents reported feeling lonely most or all of the time over the past four weeks, while 35% reported being lonely at least some of the time. Source: EU Science Hub – “Loneliness Prevalence in the EU”.
[4] Source: Eurostat – “Household Composition Statistics”, May 2024.
[5] Source: JLL – “The Flex Living Market in Spain”, May 2024.
[6] Source: Savills – “European Serviced Apartments 2024”, August 2024. 
[7] In May 2024, France passed a law tightening restrictions on short-term rentals like Airbnb, with Paris leading implementation. In Barcelona, licences for over 10,000 short-term rental apartments will expire in November 2028 and won't be renewed.
[8] Source: JLL – “Market Report: European Living & Hospitality”, March 2025.
[9] Source: Euromonitor International – “Euromonitor International Reveals World’s Top 100 City Destinations for 2024”, December 2024.
[10] Source: Global Business Travel Association – “European Business Travel Spending to Hit $391.1 Billion USD (360.4 Billion Euros) in 2024, Reflecting Strong Growth Amid Economic Challenges”, November 2024
[11] Source: European Travel Commission – “ETC Quarterly Report Q3 2024”, November 2024.
[12] Australia capped annual growth of international student programmes in August 2024. The US now limits F-1 students to five months abroad, while the UK restricts dependents to postgraduate research or government-funded courses from January 2024. Source: Study Australia, MIT International Student Office, Gov.UK
[13] Source: Savills – “European Purpose-Built Student Accommodation Investment Barometer Report”, November 2024.
[14] Source: Cushman & Wakefield – “European Living Outlook 2025”, December 2024.
[15] In Europe, converting buildings between uses requires planning approval and may involve public consultation. For example, hotel-to-residential conversions are reviewed case by case, based on housing needs, affordability, neighbourhood impact, and residents' quality of life
[16] Source: CBRE – “How Can Co-Living Help Resolve The Housing Crisis?”, September 2024.}