According to Savills laterst Student Housing Ranking, published today by the international real estate advisor, The Hague offers the best opportunities for buyers who want to invest in student housing in the Netherlands. The city has risen by 14 places, from 15th to number 1, and has also risen up the ranks the most.
Largest shortfalls in university cities and The Hague
Previously, the student population only grew in university cities but now The Hague is bucking this trend. Despite lacking its own university, the number of students is expected to grow strongly over the next few years. The main reason for this is that more and more students who are formally studying at Leiden University are now actually studying in The Hague, where Leiden University has a campus. As such they are now officially registered in The Hague.
Jordy Kleemans, Head of Research & Consultancy at Savills in the Netherlands, says: “As a result of the growing student population in the university cities and The Hague, the pressure on the student housing market continues to increase. The largest shortfalls, at more than 5,000 units, are expected in Amsterdam, Rotterdam and Utrecht. This can be explained by the growing demand in combination with the limited number of new developments. However, the number of new developments varies considerably per city. For example, in Leiden the number of units planned has increased by 51% over the past 12 months, while the pipeline in Enschede fell by 62% last year.”
Investors’ appetite for student housing remains strong
This shortage is stimulating interest in student housing among investors. After an expected fall in investment volumes in 2017, investment began to rise sharply again in 2018, by more than 50% to over €420 million. In addition, the ever-compressing initial yields are increasingly shifting towards those seen in the regular residential market.
Bas Wilberts, Head of Alternative Investment at Savills in the Netherlands, adds: “It is not just the high demand for and limited supply of student housing that is responsible for stimulating interest among investors. It is also the rental growth of 6.7% last year that is drawing investors’ interest. Student housing is a maturing asset class and is therefore shifting from a value-add product to a core+ / core product. Furthermore, additional earning models, such as micro- and branded-living, in combination with strong exploitation concepts, offer investors the opportunity to generate additional returns.”
Savills Student Housing Ranking 2019
The Savills Student Housing Ranking for investors is based on four elements of supply and demand: changes in the pipeline, the deficit per student (current and future), the pipeline in relation to the number of students and changes in rents. A high ranking indicates a shortage in the market or the prospect of a growing shortage. A tighter market with high demand and limited supply represents opportunities for investors in these cities.
Download the full report here