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Real Estate Investments in Student Residences on the Rise

9 May 2018

Real estate investments in student housing in Europe increased by 29% in 2017, reaching a volume of 13.6 billion euros.

The Student Housing Guide, which was developed by a newly created Cushman & Wakefield (C&W) team that is focusing on the business segment, concludes that Student Residences are moving out of the “alternative sector” category to become a conventional category with considerable volumes of allocated capital worldwide.

Germany is among the countries with the highest amounts of development in the segment since it has the largest student population in Europe and has experienced a strong increase in the last ten years when compared with the rest of the continent. High demand and a stable investment environment have led several international investors to enter this market in the last 18 months, including Brookfield, GIC, Allianz, BVK and Harrison Street.

According to the study, Spain is another growth market, where 600 million euros were invested in student housing transactions in 2017, mainly through the sale of two large portfolios to new investors: GSA and a consortium of AXA, CBRE GIP and Greystar. Spain will remain an attractive country for its internationally recognised universities, from an increase in the number of students from other countries and the low rates of available accommodations.

C&W also noted that the tendency is also already visible in Portugal, with a number of investors interested in acquiring student residences that operated by well-regarded firms. However, the market is still in an early phase, limiting transactions, given the shortage of potential acquisitions that are in line with investor needs.

“Until quite recently, the supply of student housing in Portugal was limited to projects operated by universities, which were largely insufficient to meet demand, and which were complemented by private housing. Recent trends in Lisbon and Porto’s residential markets led to a further reduction in student housing. This situation, together with strong growth in the number of foreign students in Portugal (currently, about 37,000, a growth of 40% in the last three years), has increased the level of interest in developing private student housing to meet the excess demand,” the report stated.

The consultancy also noted that at present, several local and international operators are actively seeking opportunities to develop student residences. “Collegiate, originally from the United Kingdom, inaugurated its first project in Portugal at the beginning of the year in Lisbon and intends to expand to other parts of the country. Milestone, an Austrian operator, is developing a residence on the Campus da Nova that is expected to open later this year. Nido Collection, which is responsible for a portfolio of more than 2,000 beds in the United Kingdom, is also developing a residence in Porto, one of the largest in the country, with more than 1,000 beds. Local operators are also very active, particularly Smart Studios and UHub,” it added.

Original Story: Diário Imobiliário

Translation: Richard Turner