The European residential real estate market is undergoing a transformation. According to CBRE, niche segments in the residential sector are expected to gain increasing importance, including micro-apartments, senior living, student housing, luxury residences, and co-living concepts.
2023 was characterized by a significant decline in transactions, but 2024 is showing a turning point. More stable interest rates, new price levels, and growing investor interest indicate a revival in the market. This article analyzes key developments, pricing trends, and forecasts for various residential niche segments in Europe.
Overview of Residential Niche Segments
1. Micro-Apartments (Micro-Living)
Micro-apartments are compact, fully furnished units ranging from 20-35 m², particularly in high demand in major cities. They offer:
- High rental yields per square meter
- Flexible living concepts with hotel-like services
- Target audience: Young professionals, commuters, and expatriates
Prices & Rents:
- In Berlin, rents range from €27-50/m² (all-inclusive).
- In London, rental prices can reach up to €70/m².
- Purchase prices often range between €4,500-8,000/m².
2. Senior Living
With demographic shifts, the demand for senior-friendly housing is rising. Investors are increasingly focusing on service-oriented living and nursing homes.
Market Trends:
- High occupancy rates (often >95%)
- Long-term stable rental and income structure
- Growing international investor interest
Prices and Yields:
- Prime yields between 4.0-5.0%.
- Rents: €800-2,000 per month, depending on location and service level.
3. Student Housing (PBSA – Purpose-Built Student Accommodation)
Student housing remains in high demand due to increasing student numbers, particularly in university cities.
Key Facts:
- 98% occupancy rates in top cities
- Rental increases of 6% per year
- Investments grew by 34% in 2024
Prices and Rents:
- Rental prices: €500-800 per month in Western Europe, €300-500 in Eastern Europe.
- Yields: 5.0% in core markets.
4. Luxury Residences (Prime Residential)
Luxury real estate remains an attractive asset class. Despite global uncertainties, demand remains strong.
Market Trends:
- 2023: +3% global price increase
- International buyers drive the market
- Strong demand in Paris, London, and Madrid
Prices and Rents:
- Purchase prices: €10,000-50,000/m², Monaco leads with €50,000/m².
- Rents: €4,000-15,000/month, depending on city and location.
5. Co-Living
Co-living combines private rooms with shared spaces and targets young professionals.
Market Opportunities:
- +51% investor interest
- High demand in metropolitan areas such as Berlin, London, and Amsterdam
- Flexibility and community as main advantages
Prices and Rents:
- Rents: €600-1,200 per month (all-inclusive)
- Yields: 5-6%, growing investor interest.
Future Outlook: Why Are Transactions Increasing?
According to CBRE, several key factors are driving more transactions in these residential niche segments:
- Interest Rate Stabilization: Lower financing costs facilitate transactions.
- Demographic Trends: Urbanization, increasing student numbers, and an aging population drive demand.
- High Rental Yields: Particularly in student housing and co-living segments.
- Shortage of Supply: Housing shortages lead to higher rents and increased investments.
- Alternative Investment Opportunities: Investors seek alternatives to traditional office or retail real estate.
CBRE expects that student housing, co-living, and senior living will experience the highest growth rates in the coming years. Investors are increasingly focusing on forward deals and platform investments to capitalize on stable rental incomes and growing demand.
Conclusion: A Strong Investment Trend 2025
The residential niche segments offer attractive opportunities in 2025 and beyond. Micro-living, student housing, and senior living are particularly benefiting from structurally high demand.
- Student Housing & Co-Living: High rental rates, increasing investor interest.
- Senior Living: Stable income streams, driven by demographic trends.
- Micro-Apartments: Urban demand supports strong yields.
CBRE expects transaction volumes in the residential sector to increase significantly in the second half of 2025. Interest rate developments and regulatory conditions will remain key factors for investors.
