Posted on 13th of June, 2019

How smart is it to invest in the Student Housing industry in Europe?

The increase in students attending higher education has led to a massive restructuring of the student housing industry. Over the last decade, the student-housing market has rapidly grown and seen various record levels of investment. This is mainly due to the increase in enrolment of students in higher education institutions. Not only this, but the number of international students in Europe has also been on the rise.

In 2014, there were a total of 4 million international students studying in Europe. By 2020, the total number is expected to surpass 7 million international students, which clearly indicates an incredible growth. Moreover, because of high rental prices for private housing markets, the demand for affordable student housing is rising. Most students, especially international and foreign exchange students prefer to live in student housing facilities. As a student, living in a student housing facility, or dormitory offers you the opportunity to interact with fellow students and get to know them better.

It is a straightforward way to build a social lifestyle at university outside of the campus itself. Events usually take place at dormitories, which also helps aid with the level of interaction between students. For international and foreign exchange students, this is a pretty vital aspect considering the usual scenario where they move to a new country and do not know anyone there, making student housing facilities and the social atmosphere very fundamental for them.

Overall, the relevance of student housing is depicted here so far, but what exactly makes it a good industry to invest in?

Further in this blog, several nations are analyzed on their student housing markets and the opportunities they offer for investments. All data recorded has been researched by JLL.

Germany is widely known for its ability to attract a great number of international students from all over the world, mainly as a result of the country’s low tuition fees and quality of education. Germany possesses the largest student population in all of Europe. Not only this, but over the last decade, the total number of students in Germany has risen by 28%. Amongst this statistic, only 1% is made up of part-time students, clearly depicting a high demand for student housing in the nation. Unlike the high demand for student housing in Germany, the level of supply is not that great due to the large number of students. Because of this, some students rent shared apartments or studios from private housing markets. With an increase in supply of student housing, the profit from investments is almost certain.

The Netherlands is one of the most popular destinations for international students in Europe. In fact, the number of international students in the Netherlands has actually risen by an incredible figure of 164% over the last decade, indicating a clear high demand for student housing in the country. Since it is very uncommon for universities in the Netherlands to have their own student housing facilities, the market is mostly occupied by private businesses such as DUWO, The Student Hotel, and XIOR Student Housing. The Student Hotel and XIOR have been investing well in Dutch student housing over the last few years, with several new locations being opened across the country. Moreover, supply levels for student housing are pretty stable in the Netherlands. However, rent prices can be pretty costly for students, especially in the Randstad region that includes Amsterdam, The Hague, Rotterdam, and Utrecht, which all possess a very large number of student populations. Because of this, investing in building student-housing facilities at lower rent prices would be a pretty profitable and popular choice for students

Spain is another famously known country for its student body. The country is a popular destination mainly due to its year-round sunny weather and social life of students. As a result, a large number of students are doing their Erasmus semester studies abroad in Spain: Mainly in Madrid or Barcelona. Supply for student housing in Spain does not stand at a positive level. Approximately 5% of all students live in PBSA (Purpose Built Student Accommodation), and most of those usually stand at a full occupancy level. This highlights the relevance of increasing the supply of student accommodation, especially for internationals. Not only this, but with rent prices being quite high in cities like Madrid and Barcelona, Spanish students tend to remain living at home with their families. Investing in this market for a higher supply of affordable student housing would be very profitable for students in Spain.

The previous countries were analyzed on their status in student housing markets and the potential for further investments. The figure above also depicts the levels of supply and demand. Although only a few countries were listed in this blog, other countries such as the United Kingdom, Italy, and France also possess similar prospects. Some countries already have major players of student housing in these markets, but the opportunity for entry is still there and is a profitable choice.

Overall, not only does investing in student housing in these markets make a profitable benefit, but it also provides students with the opportunity to find more affordable rent and be part of a socially integrated student body. .

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