September 2021 could signal the return to normality in the European student housing sector, delegates heard at Real Asset Media’s Student Housing, Micro and Co-Living briefing, which took place online recently on the REALX.Global platform.
“Everyone has experienced some disruption due to the pandemic,” said Brian Welsh, head of student, Round Hill Capital. “But we expect the domestic student market to go back to normal in the Autumn term this year, in Covid-secure residences. For international students it will depend on flight restrictions being lifted, because you can’t get the bus from China. But by September 2022 it will all be in the rear view mirror.”
The composition of tenants in PBSA will change in the short term, as domestic students and students from other European countries will replace arrivals from overseas, but demand will pick up.
“Occupancy rates will go up again, because young people are desperate to get back to Uni,” said Rainer Nonnengässer, CEO, International Campus. “My expectation is that we’ll see a stronger inflow of students from Spain and Italy, eager to get away from their less vibrant economies. We saw that trend after the GFC and we’ll see a similar phenomenon this year, but by 2022 at the latest we’ll be back to normal.”
More difficulties due to UK’s reliance on international students
The UK, which is more reliant on international students, may experience more difficulties and its exit from the Erasmus mobility scheme will benefit countries like Ireland and the Netherlands.
Germany offers a lot to students and investors alike, said Mark Holz, head of research, Corestate Capital Partners: “Universities are excellent and good value for money, while the polycentric nature of the country makes an interesting investment proposition, because you can have a diversified strategy within one country.”
Ireland and the Netherlands have the advantage of the use of English language, while Germany offers the choice of large cities like Berlin but also smaller university towns like Heidelberg. But other countries are fast emerging.
“It is naïve to think that Western Europe will hold a monopoly over higher education for long,” said Welsh. “Poland is a sleeping giant, and the cost of becoming a doctor there is 10% of becoming one in the US. Portugal is flexible and willing to have more courses in English.”
Universities across Europe are ambitious and want to expand, so the offer is becoming more varied and students have more choices.
“The digital nomads have not disappeared with coronavirus: students and young people will go back to being mobile and dynamic, choosing where to live and work,” said Holz. “I am optimistic that after the pandemic we’ll witness a renaissance.”