Investors continue to have faith in student housing as a resilient sector, delegates heard at Real Asset Media’s Student Housing, Micro-living and Co-living investment briefing, which took place online yesterday with over 780 participants from 40 countries.
‘Institutional investors are sure they will get their long-term returns,’ said Samuel Vetrak, Chief Executive Officer, Bonard. ‘There is more confidence in student housing than in other asset classes like retail or offices and no desire to divest’.
In Asia, the first to experience and get over the epidemic, ‘student housing has gone from bottom of the list to 3rd most in-demand asset class by investors with capital to allocate,’ he said.
The same trend is likely to be seen in Europe next year. ‘We anticipate that there will be more players in 2021 and competition for student housing assets will be intensified,’ Vetrak said.
The expectation is that the negative impact the coronavirus is having on the sector will be short-lived. This is based on the expected U-shape crisis, while there still can be the W-shape scenario which would delay the arrival of students, but would not change the basic premise – there are more students in and after recessions and students will return to classes sooner than economy to its normal. Some operators are experiencing cancellations, deals and transactions have paused and opportunistic investors are on the prowl for bargains.
‘Unlike the hotel sector, student housing is experiencing some difficulties but no collapse,’ he said. Another sign of optimism is that ‘developers are not concerned and continue to work whenever possible’. There is a pipeline of 725 new projects being developed in Europe, some of which will be completed this year.
Rents have remained stable and they are not expected to drop. ‘Some operators have tried rental discounts, but this strategy doesn’t seem to work,’ said Vetrak.
Looking ahead, there is a big question mark over the Autumn term as Universities have to make decisions about when to open. ‘About 90% of stakeholders we have contacted expect a return in September/October’, he said. ‘There has been only a slight or no decrease in accommodation bookings, and some places have had more bookings than they did by this time last year’.
With Visa and consular offices closed in many places and restrictions on flights, it will difficult for international students to travel. In the short term mobility and exchange programmes like Erasmus will be limited, so the market will rely much more on domestic students.