Savills: Inv’t In Student Hall Market Will Far Exceed €600M In 2017

31 October 2017 – Eje Prime

Between €500 million and €600 million. That was the price paid by a group of international investors to acquire Grupo Resa, the largest platform of student residences in Spain, with 9,309 beds in 19 cities, including in Madrid, Barcelona and Salamanca. AXA Real Assets, CBRE Global Investment Partners and Greystar backed the company, a significant investment that goes hand in hand with the rise of this alternative market in Europe. This operation is a clear example of the boost that this alternative asset is enjoying in the real estate sector in Spain and across Europe.

In neighbouring France, investment in the sector rose by 245% and the forecast is that €250 million will be invested in transactions in 2017. But if there is a country whose student hall market has grown beyond all doubt, it is Germany. The German market has seen a five-fold increase in investment in student residences (380%) and expects to exceed the €1,000 million threshold by the end of this year.

These results all indicate that the whole European continent is now taking this market seriously, although there are still countries where the student hall business is much larger. In 2016, the main players in this sector, the USA and UK, saw a record-breaking volume of transactions involving the purchase of assets of this kind, amounting to €14,100 million, up by 5.4% compared to 2015 (…).

Data from the World Student Housing study, prepared by the real estate consultancy Savills, shows that migration is increasing in the world each year. Almost five million students studied overseas during 2015, which represents an increase of 130% since the beginning of the 21st century. The forecasts indicate that 8 million students will study abroad in 2025.

The Spanish case: great influx and new projects

As a Spanish-speaking country, Spain receives a large volume of Latin American students each year. Of the more than 100,000 international students that it welcomed last year, 10% were from Colombia or Peru. They are, together with the Italians, the overseas nationalities that flock in the greatest numbers to Spanish universities.

This international influx, which accounts for 7% of the total number of students on the state university map, has sparked interest amongst different funds looking to build and buy student halls in the country. The Swiss fund Corestate entered this market last year, with the purchase of a hall of residence in Madrid, for which it paid €13.5 million, whilst Temprano Capital is going to build a 10,000 m2 student residence in Esplugues de Llobregat (Barcelona). Moreover, the multi-national The Student Hotel is now active in Barcelona; and ThreeSixty Developments, a fund managed by Oaktree, sold the Nexo student halls to GSA.

In total, the student hall market in Spain expected to see investment of €600 million in 2017, with a yield on prime residences of 5.75%, above those in countries such as the UK and Germany (5% in both). With the sale of Resa alone, that target has already been fulfilled (…).

Original story: Eje Prime (by Jabier Izquierdo)

Translation: Carmel Drake