Is Europe for the Student Accommodation sector the same as the BRIC economies to the world?
Student Accommodation Market
- Paris has a relatively under-developed purpose-built student accommodation sector. Although the city has the largest number of international students in the country, twice as large as the next biggest student centres of Lyon and Lille, just 9% are catered for with purpose built accommodation.
- The Paris market poses great opportunities, but entry into the property market is difficult. Central sites in close proximity to institutions are extremely difficult to come by, and are also in strong demand from other sectors, including an established private rental sector.
- Its international student population is anticipated to rise from 12% to 30% of all students by 2020. This will create more demand and provide the opportunity for the student accommodation sector to grow as long as it can overcome the obstacles to entry into the market.
- Approximately 22,700 purpose build student units are planned to be delivered in the top 20 university cities in France over the next four years, which will add 24% to total stock. Lyon, Lille, and Marseille have the most units planned, which will add between 5% and 10% to existing stocks.
- Student housing is still a niche market but increasing demand, high occupancy rates, strong rental growth and low yields are responsible for why the sector is attracting a growing level of interest from investors in France.
- Increased funding from government should lead to accommodation more than doubling by 2020, growing to 220,000 units. As a result, the national student housing provision rate is expected to reach 24% by 2020.
- 65% of Italian students live with their parents and study in universities of their home region, one of the highest proportions in Europe. Purpose-built student accommodation in Italy is typically provided by the university. This means less demand for the sector.
- Italy has yet to experience any significant institutional investment in its student housing market.
- Due to the poor state of Italy’s national finances, there is unlikely to be any significant new supply of student housing from the public sector in the near future.
- Milan poses the greatest opportunities for investment, given its large student market, high quality institutions and low levels of purpose-built student housing.
- The Dutch government has been proactive about increasing the supply of student housing. In November 2011 a plan was implemented to produce 16,000 new rooms by 2016, focusing on the major cities.
- As a result, Amsterdam, the Netherland’s largest student market, is seeing significant new investment, which will aim to deliver the 10,000 student accommodation places required in the period 2010-2014.
- By 2020 the expected increase in demand will require another 80,000 new places for student housing.
- Cities such as Groningen and Utrecht, with 28,000 and 30,000 students respectively, offer investment potential due to the lack of student housing provisions.
- 80% of the student housing is university run, the remainder are run by either universities or religious bodies, providing cultural, academic, religious or sporting facilities as part of their offer.
- Strong competition comes from small scale landlords in the private sector, with more ‘accidental landlords’ adding to private rental stock in a weak sales market.
- The economic and debt crisis in Spain has resulted in an 80% fall in student housing completions over the last three years.
- There are opportunities in the Spanish market, due to a slowing in the delivery of new supply (the number of accommodation places growing by just 1.1% in 2012-13), and a growing student population.
- However, the domestic economy remains weak and the private sector increasingly competitive.
- Accommodation for students in Germany is provided through Studentenwerk, a semi-governmental institution providing a range of services to college and university students.
- There are just under 230,000 places in publicly funded halls provided by Studentenwerk, leading to an 11% national student housing provision rate.
- German cities feature relatively low down the cost of living and renting scale on a European level, given the affordability of accommodation provided by the country’s Studentenwerk.
- The rate of student housing provision in many German cities is low and private providers are making moves on the market.
- Darmstadt stands out as an opportunity, given higher cost of living and particularly low provision of student housing.