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First steps for Italy in student housing

01 February, Il Sole 24 Ore

In Italy, the number of students is stable (1.69 million students, a 1% increase between 2016 and 2017), but the issue around beds and student accommodations has been left unsolved for years.

The conference organized by Cdv Conference showed the situation of the sector. Nowadays, reports Nomisma, the accommodations offered to students are represented by residences provided by the regional authorities (Dsu), by beds directly managed by universities and those managed by the public and private authorities. “The offer is not enough to satisfy the accommodation needs of the students moving from other towns”, says Marco Leone di Nomisma.

In the meanwhile, the volumes of student housing are growing in Europe. From 2007 to 2017, the number has gone from 720 million euro to the current 7,345 million (the peak was in 2015 with 8,496 million euro), while a reduction of the gross yield has been reported for the 2013-2017 period, going from 6.3% to 4.7%.

Therefore, the segment has become an investment asset class, and it has just started picking up in Italy. “The sector has just started- says Alberto Sidro of Fabrica Sgr- in Italy, if a company wants to invest in a student house for rent it will not find any offer”.

Italy is estimated to lack 75 thousand beds in total in order to reach the European average. It would take investments for over 4 billion euro to adjust the offer.

Therefore, these are the first operations. They’re mostly carried out by international investors. The main cities of interest are Milan, Bologna, and Venice. Among the minor cities, there are Genoa, Verona, Pisa, Naples, Catania and Palermo.

The Student Hotel was one of the first to arrive in Italy and it’s currently implementing four facilities in Bologna and Rome, and two in Florence (for a total of over 1,800 beds), planning to invest in total 250 million. The American group Hines has already launched the works for two facilities in Milan, in the Bocconi area, and in Florence, and it’s intending to invest in the segment 500 million euro in the next years.

“Student houses will be in the future an important element for growth – say the experts from Nomisma – This is something to be considered by the competition, as well as by the universities and the cities where such universities are based, as the presence of such facilities determines their attractivity”.

These new projects might also trigger a virtuous cycle in the rental market since students are often compelled to pay high rents that are not justified by the quality offered.

According to Nomisma, nearly a half of the residences have a capacity between 30 and 100 beds, while 18% can accommodate between 100-200 beds. Only 11% have a capacity of over 200 beds. Among these, there are facilities such as Campus X Tor Vergata (1,500 beds), the student house San Bartolomeo dell’Opera of the University of Trento (830 beds), the campus Praticelli in Pisa (816 beds), the residence of the University of Calabria (nearly 3,000 beds).

Concerning the asset class of alternative investments, Fabrica Sgr holds a portfolio of 4,500 beds through the funds Aristotele and Erasmo. “Our model of student housing is a type of social housing – says Sidro. – Our projects are located in Turin, where we have 540 beds in the campus San Paolo, in Venice and Padua with over 600 beds, in the facility Studentello in Bologna, where we also have a low-cost hostel (35 euro per night)”. Fabrica has invested in the sector an amount equal to 200 million euro. “The Campus X Tor Vergata has been our first initiative and it’s today one of the biggest student facilities in Europe”, continues Sidro. Fabrica has also a campus in Chieti and in Bari.

What are the returns from an investor perspective? Generally, they’re around 4.5% for an average monthly rent of 400 euro per bed. It’s interesting to note that the yearly working expenses average 1,000 euro per student. However, there are still only a few companies operating in this sector in Italy.

Source: Il Sole 24 Ore

Translator: Cristina Ambrosi