25 July, Il Sole 24 Ore
Italy is looking for better accommodation solutions for its university students, and there is a lot of activity from national and international investors, considering that this an asset class that can grant high incomes. For sure, student housing can provide higher returns than government bonds, but also higher than more traditional sectors such as offices, shopping centres and residential properties. For this reason, there are currently over ten projects for the construction of student halls in Italy, and there are more coming if we look at the feasibility studies.
JLL created a thorough dossier titled Student housing in Italia, 2018. As Il Sole 24 Ore anticipates, the report shows the intense activity in the sector. Moreover, since Italy is at the bottom of the chart at European level, the market is still little competitive, and there are good chances to obtain high yields. Just looking at the numbers is enough to understand the situation.
If we compare the number of beds with the total number of students, the ratio in Italy is below 3%, while it’s 23% in the UK, 15% in Ireland, 11% in France, 9% in Germany and 6% in Spain. In Italy, 75% of the university students live with their families, while this percentage drops to 5% in Finland, it’s below 20% in the UK and 50% in Spain. Little more of 2% of the Italian students live in student halls, whereas the European average is 19%.
After all, there aren’t many accommodation options in Italy, considering that renting a house is expensive and the properties are extremely low quality and without the facilities that only a student residence can offer such as shared services, meeting places, spaces for work and study, sports facilities and so on. But it’s an interesting market, for the total investments in student housing in Europe were 6.5 billion in 2017 (83% of which concentrated in the UK).
We asked JLL which are the main projects currently developing in Italy to understand in where the efforts and the investments are concentrated. Even though the picture is not complete, the cities at the top of the chart are Turin (where Camplus aims at accommodating 2 thousand beds), Milan (where Hines alone is developing 600 beds near Bocconi), Florence (where always Hines has in the pipeline an investment for 500 million euro in the next two years). Finally, the specialised company The Student Hotel plans to open two facilities in Bologna by 2019 and two in Rome by 2020.
Then we must add other initiatives to the figures provided by JLL, like the campus that will rise in the former Expo area in Milan, as well as the many projects of Cdp. This latter is working together with bank foundations, retirement and property funds to implement student halls all over Italy. In addition, in Santa Marta, Venice, there are construction works to build a new wing to accommodate student residences. Besides Cdp and Hines, Fabrica Immobiliare Sgr is another active player, with a portfolio of over 4,500 beds.
There is still a lot of work t be done to reach significant volumes in this sector, considering the investments amounting to 5.4 billion in the UK, 391 million in Austria and 360 million in Switzerland, whereas in Italy investments are still below 7 million. But the market is slowly recovering. And the demand is not stopping in the meanwhile. On the contrary, to the Italians moving to another town to study, we must add the international students studying in Italy, which have doubled and amounted to approximately 100 thousand in the academic year 2016-2017.
In conclusion, there are 49,500 beds in total in Italy. Even though they have increased by 4% from the academic year 2009-2010, they have to satisfy a potential demand of more than one million students, as JLL estimates. The potential income for the investors ranges between 5.5% and 6.5%.
Source: Il Sole 24 Ore
Translator: Cristina Ambrosi