In their Global Living report, the international real estate company notes that student housing is highest in the United Kingdom, where 27% of all students can be accommodated, and lowest in southern Europe. In Italy, the fourth largest student market in Europe, the national offer rate is less than 5%. Analysing the data provided by StudentMarketing - an independent research and data provider for student and micro living accommodation, Savills identified that the offer is lowest in Rome with a student population of 220,500 but only 6,500 beds (3%), followed by Porto (3.5%), Florence (3.8%), Barcelona (4.9%) and Madrid (5.7%). These cities offer the best immediate opportunities for investors, as many have strong populations of international students.
Marcus Roberts, Director of Residential Capital Markets in Europe from Savills, comments:
"Italy is proving to be an attractive market for investors, where supply is low and the quality of existing housing is outdated. Demand is strong, but a limited comparable product reflects the emerging nature of university residences, and the market is still not fully tested. Spanish cities and some Portuguese cities are also characterized by extremely low levels of supply, registering a high demand and a strong rise in the rental market. We currently have private equity investors particularly active in the Iberian market, with Spain witnessing a record volume of investment in student housing over the last 12 months."
Alexandra Gomes, Senior Analyst, Research Department comments: "For the Portuguese market, Savills Portugal points out the diversification of investment by alternative asset classes as one of the strongest trends for 2019, as is the case of Student Housing and Senior Living. The cities of Lisbon and Porto are two of the cities in southern Europe that have most been on the radar of several international operators who have acquired several plots to promote PBSA and that will contribute to respond to a high demand, with continuous perspectives of positive evolution. Currently, the Portuguese market already has a solid presence of renowned investors and promoters such as Temprano Capital Partners, MPC Capital Group, Milestone, TPG Real Estate, Round Hill Capital and The Student Hotel and continues to add new players to the market ".
"With the large share of the student housing market still being operated in the informal and non-professionalized leasing market, the PBSA market will continue to be one of the investment options with most potential, offering higher rates of return than traditional classes of assets and less volatile to possible socioeconomic risks. The Senior Living market, although showing a residual weight compared to other classes of assets, begins to show signs of activity and to gather the interest of investors. 2018 was proof of this with the market closing some investment transactions in this segment. All of the aforementioned segments reveal above all a greater appetite for risk from investors, with a view to higher returns and also a greater openness to the development of joint ventures that unite different expertise and valences in order to guarantee success of a project," concludes the official.
Samuel Vetrak, CEO of StudentMarketing, adds: "In terms of general trends, student housing in Europe is widely regarded as an established asset class with sufficient liquidity. There is a growing number of investors, including foreign and institutional investors, who have invested in student housing as a strategy to diversify their portfolio and achieve higher rates of return than in traditional asset classes. In addition, investors appreciate the fact that student housing is considered a recession-resilient asset class as the number of international students has grown steadily, even during the crisis of a decade ago."
Savills stresses that student housing reached another record year in 2017, with $ 17.5 billion invested globally, 4 % up from $ 16.9 billion in 2016. The UK and Western Europe accounted for more than half of this investment (51%, 8.9 billion), an increase of 35% over the 6.6 billion invested in 2016. The United Kingdom, Germany and Spain were the most active housing markets in Europe
Savills also highlights the move of some student housing operators to the multifamily and co-living sectors, as well as the opportunities that this move opens up for investors looking to distribute risk across multiple asset classes. Investment in the multifamily sector surpassed € 27 billion last year in eight major European markets, still a fraction of the US volume, but increased 19% since 2013.
Roberts adds, "As management quality has improved and operators have strengthened their brands, and with many markets with a lack of professionally managed private stock, vendors like The Fizz and Milestone are betting on putting new designs on the market to satisfy de demand. In the United Kingdom, the multifamily sector is still a young sector, with a total investment volume of £ 2.6 billion in 2017 - only 18% of Germany's volume, but 20% above 2016. Last year, 70% were made through financing or forward purchase. Focusing on developing new projects is likely to boost future transaction activity. "