The demand for Higher Education in Portugal
Portugal has very particular structural trends when it comes to the demand for higher education.
The trend has been very interesting, with an increase in the proportion of young people deciding to continue their studies in higher education in recent years. From the compulsory 12th grade, to the ease and availability of higher education courses at very low costs. For many years, Portuguese governments have been encouraging young people to study until later and later.
“2023 was the year with the highest ever number of students in higher education, a trend that has lasted since 2015-2016 (358,450), registering a cumulative growth of 24%.” Lusa, (2023, October 2). Portugal com o maior número de sempre de alunos do ensino superior. Publico. retrieved from Público.pt on 02/10/2023
The goal? To substantially increase the average level of education of the Portuguese population.
The long-term qualification targets set by the Portuguese government aim to “achieve by 2030 an average higher education attendance rate of 60% among 20-year-olds and 50% of higher education graduates in the 30-34 age group”, Elvira Fortunato, Ministry of Higher Education.
International mobility
Demographically, we have also seen a significant change in the demand for higher education in recent years. Portugal has made a name for itself internationally as a preferred destination for students from all over the world. From students who come under international mobility programs to foreign students who choose Portugal for their full course of studies.
2023 was the year that saw an all-time high of international students in the system, representing 17% of the total enrolment.
With this increase in demand for higher education in Portugal, most of which involves internal and international travel, the demand for suitable student accommodation has skyrocketed.
Student accommodation in Portugal
In Portugal, the supply of student accommodation is highly deficient, whether in the form of rooms in private homes or in residences specializing in this public, essentially due to two structural factors: (i) a weak rental market; (ii) a lack of investment in construction.
Despite recent investments in Purpose Built Student Accommodation (PBSA) in the main cities (Lisbon and Porto), there is still a lot to be done. Supply still doesn’t come close to matching the size of the available market, with studies pointing to little more than a 10% coverage rate (source). This is especially noticeable outside the main cities of Lisbon and Porto.
Investment in PBSA
On the one hand we have growing, consistent and crisis-resilient demand. On the other hand, we have an offer that still has a lot to be explored, with more units being built and more operational efficiency, PBSA is an asset class that allows for extremely interesting returns for the degree of risk associated with it.
Among many interesting characteristics, from the fact that stays are of a very predictable duration (between one semester and the entire academic cycle), to the fact that residents are on a fixed-term basis (they will eventually graduate), to the certainty of constant demand (a new cohort of students every year), to the fact that educational expenses are one of the last things that families reduce in a crisis situation, investing in PBSA has a significant implicit stability. It is an investment with a consistency, predictability of demand and resilience to the crisis that few investments have.
Conclusion
Portugal, for these and other reasons, is an excellent destination, not only for studying, but also for making investments in a booming sector with untapped opportunities, especially when supported by a team with a proven track record.