Growth and Change: the EU Student Housing Market
The Student housing market has grown rapidly over the past five years. In the 30 most popular student cities alone, there are 2,569 student residences with 424,069 beds. Moreover, with an additional capacity of more than 110,000 beds currently planned or under development, the asset class has reached the size, received recognition and attracted even the interest of bigger players. This increase in investment has brought with it the need for more knowledge.
First, the growth aspect: figures show that demand for student housing will be even stronger over the next five years, primarily driven by mobile international students.
A – Even the most conservative and comprehensive estimates talk about 4.9% annual growth in inbound international students in Europe, up from 1.8 million in 2013 to 2.5 million in 2020.
B – Number of short-term exchange students is expected to continue growing by 2020, adding a further minimum 310,000 students in that year and boosting the demand for student housing. This is due to new governmental policies of large countries stimulating outbound mobility (majority of which will end in Europe) e.g. USA (Generation Study Abroad), Germany (PROMOS), and Australia (New Colombo and SOSMP). Europe itself is another important factor for intra-regional mobility (Erasmus+) and is expected to contribute to a major boost of short-term students. Not to mention the UK and Canada, who are also increasingly encouraging study abroad experience.
C – Minimal risk ahead, international student numbers grow even in difficult times. The last 15 years have proved that mobility related to education is resilient to economic difficulties, political turbulences or public regulations. The demand is stronger and its nature more stable – it does not stagger like other asset classes.
And then there is the pull effect: European destinations – be it countries or cities – are investing in and encouraging students to study in their destination – more so than in the past. Now, there are more EU universities in top ranking positions (50% increase in the top 100 over last 6 years), more English-taught programmes (up from approximately 2,400 in 2007 to over 8,000 in 2014), scholarships, marketing strategies, recruitment missions, and student fairs than ever before.
These all factors are attracting more students to Continental Europe than before, as the education levels are competitive to the USA and UK, but considerably more accessible, if not free.
The increase in student mobility is accompanied with a greater need for student housing. Actually, the development of demand is outstripping development of supply. Consequently, Student Housing asset class is becoming more and more important on Continental Europe.
Recent developments confirm the trend. This under supply has led to rising investments in mainland Europe, with increased capital and new student housing funds focussing on this territory. All further driven by new platforms and associations, more conferences and events, more sponsors, partners and participants there, and thus more market intelligence and media coverage.
It is a historic moment in development of this asset class – the PBSA* map of Europe is changing rapidly, we should stay tuned, for investment and knowledge alike.
*Purpose built student accommodation is accommodation that is specifically built for occupation by higher education students having regard to their specific needs. Both public and private student accommodation buildings of all sizes are included.