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Student accommodation transactions across Europe continue to increase

Tuesday 3rd July 2018

Written by Mark Burns, Hopwood House

A new report by Cushman & Wakefield has revealed that transactions for student accommodation in Europe have increased by 29% year on year, with growing numbers of students attending higher education the driving force behind it. The report suggests a shift in trends, with investors more interested in investing into the sector, whilst more people are attending universities and higher education institutions. It is also thought that this increase is likely to continue throughout the year, with strong performance within the sector now something to expect for the rest of 2018.
Student property investment in Europe
Such an increase of interest to attend university or higher education over the last few years has been encouraged by wealth distribution and shifting demographics, both of which are likely to boost the sector moving forward. With this in mind, investor interest has been piqued and has lead to more transactions in various areas of the continent, and at various price points. With the sector being relatively new in comparison, there doesn’t appear to be a large amount of data from the whole of Europe, but this doesn’t hide the fact that interest in the sector has increased across the continent.
Among European countries and the biggest property markets in Europe, Germany has been the country that has shown the fastest growth in the market, with a rapid increase in student numbers over the last decade. Like many other countries, Germany currently has an undersupply of the relevant property type, meaning that investors are able to take advantage of the currently stable investment sector to make successful investments. Spain also appears to be performing well, with world class universities and growing numbers of students from overseas driving the market to success.
Students and higher education in Europe
Such an increase to the student property market across Europe follows a more flexible and transparent approach to higher education, with students now wishing to broaden their horizons and travel to new places, even where their education and learning is concerned.
Paddy Allen, Partner at Cushman & Wakefield, commented on the subject, saying: “We now live in a world where the student population is more internationally mobile, more flexible and ultimately has more choice about what and how to study. The result is that customer demand for student accommodation shows no signs of abating any time soon. Due to the evolving nature of the sector across Europe and increasing capital allocation, investors must become more creative in how they invest to gain or increase exposure. Operational strategy is as fundamental as the bricks and mortar, and presents both a risk and an opportunity when investing into the sector. It is vital to both drive asset performance and access opportunities. Early mover advantage still exists in many European locations, with opportunities to introduce new product into fundamentally undersupplied residential markets.”
Another European country showing great promise is Poland, with the sector seeing rapid growth following high numbers of overseas investors to their universities, despite financing for the sector being restricted.
Mira Kantor-Pikus at Cushman & Wakefield said: “The Polish student accommodation market as part of the private rented sector is growing rapidly. It is a very interesting sector for investors, especially in view of high numbers of foreign students in Poland who usually have problems with renting flats from private owners. Another group of tenants includes domestic students at both several private universities and public universities which do not provide enough beds in halls of residence. Despite limited bank financing for development of this type of assets in university cities, returns are very attractive for developers who can gain access to alternative sources of financing and exit options provided by institutional investors.”
*For more information on student accommodation investment, please contact Hopwood House

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