Credit: FreepikItaly’s PBSA Market: Can institutional capital close the gap?
As student numbers swell and international interest hits record highs, real estate leaders at the GRI Institute weigh up the barriers to delivering 300,000 beds
March 16, 2026Real Estate
Written by:Helen Richards
Key Takeaways
- Italy has become Europe's second-fastest-growing study destination, driven by affordable tuition and a rise in English-language courses.
- A staggering supply-demand imbalance exists, with the country requiring approximately 300,000 additional beds to meet European provision standards.
- The market is experiencing a flight to quality, leading to a bifurcation between high-end luxury assets and subsidised housing.
Italy’s student housing market has officially transitioned from a niche interest to a formal institutional segment, as even traditional lenders show a healthy appetite for the sector. However, a structural imbalance persists that threatens to stall this momentum.
As student numbers and the need for beds skyrocket, the purpose-built student accommodation (PBSA) market is challenged with the task of delivering a scalable, democratic product that can accommodate such vast numbers, while also navigating fragmented political regulation.
The market’s most prominent Italian PBSA players gathered in Milan for the GRI Italy BTR & PBSA 2026 roundtable to discuss the opportunities and challenges facing the sector.
This surge is driven by a significant affordability advantage; compared to traditional leaders like the UK or the US, Italy offers significantly lower tuition fees - averaging between EUR 900 to EUR 4,000 per year at public universities - as well as lower accommodation and visa application costs.
Furthermore, the proliferation of English-language courses is acting as a major catalyst for the mobile student population.
Demand is, therefore, skyrocketing, yet the gap between existing supply and European standards is widening. To reach the average provision levels seen across the EU, Italy would need to deliver approximately 300,000 beds - a figure that dwarfs the current pipeline of roughly 38,000.
PBSA is a "market of cities," requiring hyper-local strategies rather than broad national assumptions. Additionally, the product in itself requires specific technical and administrative knowhow, both on the development and operating side.
Rome presents the ultimate paradox of high demand but low delivery. Challenges include a competitive hospitality sector that often outbids PBSA for central plots, leading some developers to eye the conversion of clerical buildings - though these deals are notoriously slow due to the complex approval layers involved.
Secondary cities present varying challenges. Both Naples and Bari offer huge potential for investors in the market, however the cities remain largely off the radar for most institutional capital due to lower rent thresholds and a lack of government subsidies in the region.
Meanwhile, Bologna and Turin are seeing increased interest, but they bring a different set of risks, namely excessive regulations and bureaucratic loads, particularly concerning building permit issuance and planning delays, exacerbated by policy instability and a lack of continuity in government actions.
This segment is often willing to pay a premium for properties that offer better services, safety, and modern living standards. Institutional investors are consequently rebalancing portfolios toward Grade A products, as prime assets in Milan reach up to EUR 2,000 per square metre.
These high-quality PBSA products are also attracting investors for their inflation-proof nature, as strong rental growth in private, high-tier assets compensate for rising costs or decreasing capital values elsewhere.
Furthermore, the focus on prime locations and high-end services has triggered a backlash from local authorities, leading some municipalities to impose caps on rents or restrict short-stay tourism activities during the summer - ironically preventing operators from maximising revenue during the summer (via tourism) and thus forcing them to increase rates during the academic year to maintain their financial returns.
As rents grow, and prime products thrive, there is a limit to how much even international students can pay. If rents continue to climb towards the EUR 1,400+ per month mark seen in some top-tier assets, even Italy may lose its competitive affordability advantage.
These insights were shared during GRI Institute’s Italy BTR & PBSA 2026 roundtable, co-hosted by JLL, with participation from Matteo Lavazza (JLL), Luca Migliaccio (Ardian), Paolo Reyneri di Lagnasco (JLL - Italy), and Stefano Miola (Praemia REIM Italy SGR).
As student numbers and the need for beds skyrocket, the purpose-built student accommodation (PBSA) market is challenged with the task of delivering a scalable, democratic product that can accommodate such vast numbers, while also navigating fragmented political regulation.
The market’s most prominent Italian PBSA players gathered in Milan for the GRI Italy BTR & PBSA 2026 roundtable to discuss the opportunities and challenges facing the sector.
Demand Growth
Italy is the second-fastest-growing study destination in Europe, with international student enrolments increasing by roughly 10% per year since 2022 - the second-highest growth rate on the continent after Spain.This surge is driven by a significant affordability advantage; compared to traditional leaders like the UK or the US, Italy offers significantly lower tuition fees - averaging between EUR 900 to EUR 4,000 per year at public universities - as well as lower accommodation and visa application costs.
Furthermore, the proliferation of English-language courses is acting as a major catalyst for the mobile student population.
Demand is, therefore, skyrocketing, yet the gap between existing supply and European standards is widening. To reach the average provision levels seen across the EU, Italy would need to deliver approximately 300,000 beds - a figure that dwarfs the current pipeline of roughly 38,000.
Supply Barriers
The path to closing the gap is largely hindered by a lack of specialised developers and a fragmented regulatory framework.PBSA is a "market of cities," requiring hyper-local strategies rather than broad national assumptions. Additionally, the product in itself requires specific technical and administrative knowhow, both on the development and operating side.
Rome presents the ultimate paradox of high demand but low delivery. Challenges include a competitive hospitality sector that often outbids PBSA for central plots, leading some developers to eye the conversion of clerical buildings - though these deals are notoriously slow due to the complex approval layers involved.
Italy’s most prominent real estate leaders active in the PBSA and BTR markets gathered in Milan. (Credit: GRI Institute)
Secondary cities present varying challenges. Both Naples and Bari offer huge potential for investors in the market, however the cities remain largely off the radar for most institutional capital due to lower rent thresholds and a lack of government subsidies in the region.
Meanwhile, Bologna and Turin are seeing increased interest, but they bring a different set of risks, namely excessive regulations and bureaucratic loads, particularly concerning building permit issuance and planning delays, exacerbated by policy instability and a lack of continuity in government actions.
Flight to Quality
Against this backdrop, another force is at play: flight to quality. Modern international students are reported as a discerning customer base, seeking more than just a bed; they look for best-in-class facilities that include high-quality amenities and community-focused design.This segment is often willing to pay a premium for properties that offer better services, safety, and modern living standards. Institutional investors are consequently rebalancing portfolios toward Grade A products, as prime assets in Milan reach up to EUR 2,000 per square metre.
These high-quality PBSA products are also attracting investors for their inflation-proof nature, as strong rental growth in private, high-tier assets compensate for rising costs or decreasing capital values elsewhere.
Market Bifurcation
This flight to quality is triggering bifurcation of the market into expensive, prime assets on one side, and basic, affordable housing on the other. This dynamic has led to a significant lack of products for students who are neither low-income and eligible for PNRR-subsidised beds, nor wealthy enough to pay top-tier rents.Furthermore, the focus on prime locations and high-end services has triggered a backlash from local authorities, leading some municipalities to impose caps on rents or restrict short-stay tourism activities during the summer - ironically preventing operators from maximising revenue during the summer (via tourism) and thus forcing them to increase rates during the academic year to maintain their financial returns.
As rents grow, and prime products thrive, there is a limit to how much even international students can pay. If rents continue to climb towards the EUR 1,400+ per month mark seen in some top-tier assets, even Italy may lose its competitive affordability advantage.
These insights were shared during GRI Institute’s Italy BTR & PBSA 2026 roundtable, co-hosted by JLL, with participation from Matteo Lavazza (JLL), Luca Migliaccio (Ardian), Paolo Reyneri di Lagnasco (JLL - Italy), and Stefano Miola (Praemia REIM Italy SGR).