Investment in Student Residences on the Rise in Europe
Students residences have become a popular real estate product in Europe, accounting for 3 out of the 10 largest real estate investment transactions registered in the European continent, according to an analysis carried out by leading commercial real estate consultants, CBRE.
Although the Spanish market is not as established as the English or German markets, real estate transactions relating to student accommodations have certainly been attracting investors’ interest, due to the higher level of returns achievable, compared with offices or retail properties, and in fact Madrid and Barcelona will soon have two new projects with a value of 52 million euros that will represent a total of 940 new keys (student homes).
According to CBRE, Spain has a stock of some 94,000 keys, of which approximately 52,000 are located in the five main university cities: Madrid, Barcelona, Salamanca, Valencia and Seville.
Of the total student residences in Spain, El Economista reported that only 20% are privately owned and run by their owners, while the remaining 80% of the properties are publicly owned and belong to universities, or are religious institutions and are managed on a concession basis.
Over the next few months, CBRE foresees a number of transactions in this segment, given the high interest of investors and international management companies seeking to expand their businesses in Spain, which still has 4 of the 10 cities ranked most in demand by European students wishing to gain access to the Erasmus programme.
By volume, the biggest transaction registered in the first six months of the year in the Spanish market was the acquisition of a portfolio of two residences inBarcelona’s Melon District (Poble-Sec and Marina) by The Student Hotel.
In addition, two major concessions in the Ciudad Universitaria in Madrid have changed ownership, while construction has started on the ‘El Faro’ residence in Isaac Peral (Madrid) which will have 370 keys and which will be managed by The Student Housing, which is also to manage another project of 570 keys in development in Barcelona. Together these represent an investment of 52 million euros.
Within the European market, England recorded transactions last year worth 2,950 million euros, volume that has already doubled in the first half of 2015.
Germany is expected to double the 220 million euros invested last year, while in the Netherlands the five big university cities of Amsterdam, Rotterdam, Utrecht, Groningen and Eindhoven accommodated a total of 375,000 university students.