It is interesting how quickly the market perspectives change. Whereas in 2016 many in the real estate market were still convinced that student housing was a locally anchored niche segment, in 2018 we were able to diagnose the establishment of an asset class. The number of transactions increasingly shifted into institutional, often pan-European hands, characterised by a strong increase in the inflow of funds.
2021, on the other hand, is marked by a continuing housing boom, but also undoubtedly by the COVID 19 pandemic. In the case of the first, negative signs are not discernible; in the case of student housing, immediate reference is made to the students who - in the worst case - are now already in their 3rd semester pursuing their studies from home. However, current market activity hardly substantiates this pessimism.
In our current Market Tracker "Student Housing Europe 2021 ", we have analysed this dynamic form of use and created a country overview.
Here are some key statements from our analysis:
- The current front-runner in terms of student numbers in a country comparison is Germany (2,891,000), followed by France (2,725,300) and the UK (2,532,400). The United Kingdom has the largest share of international students, currently 22%.
- The highest supply rates for student housing are currently measurable in the UK (26%), followed by Denmark (22%) and Sweden (20%), the lowest supply rates are in Italy (4%) and Portugal (5%). It should also be noted, however, that the supply of student housing accommodation does not meet the continuing need, and supply rates are very low overall.
- Student housing during the COVID 19 pandemic: Between April 2020 and January 2021, a strong decrease in mobility, especially of international students, can be observed. It is clear that this development is almost entirely due to travel restrictions. We were able to determine a Europe-wide decline in room occupancy of around 10%.
- However, strong geographical differences can be observed: Cities with an undersupply of student accommodation show much more resilience than locations with a more balanced housing vs. student housing supply.
What is clear is that there will be life after the end of online lectures. The student housing asset class has seen steady growth over the last 10 years, with average prices per unit (i.e. per room) increasing since 2012: The average price per unit was around €145,000 at the beginning of 2020.
For the current year, we expect a continued high willingness on the part of investors. These often show themselves to be less dogmatic, because "where it says student on it, it doesn't always have to say student in it". To put it more simply: The demand from the - often tight - local housing markets is also clearly felt by us or the other operators of the properties. The demand for temporary housing continues unabated. This is said by someone who has to grade the traditional users for student housing again at the end of the semester.