Student accommodation is increasingly establishing itself as an institutional asset class in Germany. Newmark's current report, "Student Accommodation in Germany", analyses the key demand and supply drivers of the Purpose Built Student Accommodation (PBSA) market and the resulting investment potential. The attractiveness of this asset class for institutional investors is evident in the rental conditions: the all-inclusive rent for furnished student apartments in the Top 7 markets ranges on average between 26 and 35 Euros per square metre. This pricing power positions PBSA as a high-yield residential asset class for investors.
A crucial factor driving demand is the rising number of international students. In the winter semester 2024/2025, 492,000 international students were recorded nationwide, representing a doubling over 20 years and a 4.6 percent increase compared to the previous year. This group of people is particularly dependent on furnished, short-term available, and professionally managed accommodation options. In total, 295,000 dormitory places are available across 84 German university cities with at least 5,000 students and 15,000 inhabitants. The PBSA accommodation rate, defined as the ratio of dormitory places to the total number of students, is just under 13 percent.
The Studentenwerke (student services organisations) continue to provide the majority of accommodation, with approximately 197,000 places. Although the stock of professional operators has nearly tripled in the last ten years, private providers still account for less than a third of dormitory places in the 84 university cities analysed. This situation indicates an imbalance between investment interest and the availability of suitable products. In 2025, Newmark recorded transactions in the PBSA segment totalling around 350 million Euros, representing a 30 percent increase over the previous year. For 2026, Newmark forecasts a transaction volume of over 500 million Euros, driven by ongoing closing phases and clearer price discovery. One-third of this volume in 2025 was accounted for by international investors.
Return Opportunities and Market Dynamics
Helge Zahrnt MRICS, Head of Research Germany at Newmark, stated that the market still offers significant potential for further institutionalisation. He pointed out that only 13 private operators in Germany have more than 1,000 beds each, collectively providing about 33,000 beds. For investors, therefore, access to scalable product, rather than demand, represents the greatest challenge. Zahrnt expects a noticeable increase in liquidity once further developments and platforms come onto the market.
Jan Kiskemper, Head of PBSA & Micro Living Germany at Newmark, emphasised that the greatest investment opportunities are not exclusively in Germany's seven largest real estate markets. Of the 84 university cities surveyed, 14 have a student population of at least 20 percent of the total population, including cities such as Heidelberg, Tübingen, Regensburg, Göttingen and Giessen. Medium-sized university cities could offer very attractive risk-return profiles due to high student numbers, limited housing supply, and comparatively low professional competition.
Return Profiles and Outlook
The prime yield for PBSA products in Germany's Top 7 markets currently stands at an average of 4.40 percent. This corresponds to a yield premium of 94 basis points compared to classic multi-family houses, whose prime yield is 3.46 percent. Newmark forecasts a stable development of PBSA prime yields until the end of 2026. A progressive institutionalisation of the asset class and sustained growth in investor demand could prospectively reduce the yield spread to classic residential investments. However, due to the higher operational component of the asset class, a significant yield spread is expected to persist. Investment performance is largely influenced by operational quality, with management, building standard, operating costs, and economies of scale directly impacting profitability.
