Student housing is the new kid on the block in CEE but it’s already in great demand, delegates heard at Real Asset Media’s CEE Student Housing and Co-Living Investment Briefing, which was held last week at the London headquarters of CMS.
Student housing is ‘getting all the attention’, said Luke Dawson, Managing Director & Head of Capital Markets CEE, Colliers International. ‘We are seeing tremendous amounts of activity. Some projects have come to completion, some are in the pipeline. Developers, operators, traditional equity investors are all stepping in and looking for opportunities across the spectrum’.
Investors are attracted by the counter-cyclical nature of student housing, especially now that the cycle is coming to an end and European economies are slowing down. ‘Even if the markets drop, interest in student housing is likely to rise. Students need accommodation regardless of the economic cycle, so it provides a much steadier income than other asset classes’, he said.
A steady income flow and liquidity on exit are another two advantages of investing in the sector.
‘There is no fear of lack of liquidity,’ said Dawson. ‘People who are deploying capital in CEE have already invested in the sector in Germany and other places and they believe very strongly that the sector will grow in scale and importance’.
Strong demand for student accommodation translates into high occupancy rates and a guaranteed income.
Despite the difference in per capita income in, say, Germany and CEE countries, ‘there is really not a huge gap between what local, inter-regional and foreign students are prepared to pay,’ said Samuel Vetrak, CEO, Bonard. ‘We have seen that when a UK-level new project is completed, people are prepared to pay significantly more for the accommodation’.
He gave the example of a new project in the relatively small Czech city of Brno, which offered rooms at €420 a month, ‘which is very high for the region, but it was 100% occupied within a few weeks’.
Extremely light-touch regulation is yet another reason why the sector is so attractive to investors. ‘The good news is that there is hardly any regulation covering the sector,’ said Wojciech Koczara, Partner, Head of CEE Real Estate, CMS. ‘It takes time to get a planning permit, but it is no different from developing offices or hotels’.
The best thing about the lack of specific rules is the flexibility it gives investors, he said: ‘It allows for the construction of multi-purpose buildings that can serve as student accommodation, micro-living or budget hotels in the summer months’.
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