‘In CEE huge growth potential for student housing’

Student housing will be ‘the next big thing’ in chronically under-supplied CEE countries

Keynote Presentation by Mark Robinson, CEE Research Specialist, Colliers International on The joint CMS/Colliers International Report into the CEE Student Housing investment market. Filmed by Real Asset Media.

Student housing will be ‘the next big thing’ in chronically under-supplied CEE countries, Mark Robinson, CEE Research Specialist, Colliers International, told Real Asset Media’s CEE Student Housing and Co-Living Investment Briefing, which was held yesterday at the offices of CMS in the City of London.

‘The growth potential is huge,’ he predicted. ‘In the next ten years CEE will experience the same growth that Western Europe has seen over the last ten years.’ In the UK, for example, 6% of total all sector investment is now in the student housing sector.

The driver is demand, as every year thousands more international students attend University courses in CEE cities and find there is no Purpose-Built Student Accommodation (PBSA) at all, while traditional state-owned student dormitories are well below the standards they expect. 

The gap between supply and demand is huge and the projects in the pipeline are nowhere near adequate. ‘The stock at this point barely exists,’ Robinson said. ‘The total of 28 assets we will have by the end of 2020 doesn’t even begin to address the demand’.

At the moment 20 units are available and 8 are under construction in the main seven cities (Warsaw, Krakow, Prague, Bratislava, Budapest, Bucharest and Sofi). Warsaw, which has an international student population of over 23,000, the highest in CEE, has no PBSA at all. 

A new Colliers International/CMS report on the sector, which was launched at the briefing yesterday, calculates that even if only 20% of international students present in CEE cities were to rent a bed, the shortfall by 2028 would be over 15,000 beds for a valuation of €1.2 bn. If 50% of students rented a bed, 53,000 units would be needed, bringing the valuation of the shortfall to a substantial €4 bn.

Research shows that as GDP per capita grows, so does investment in student housing, he said: ‘As CEE countries’ economies are growing faster than those of Western Europe, we are likely to see a substantial increase in investment in the sector. In 10 years’ time it could reach 2.5% of total all sector investment’.

Demand is the big attraction, but investors’ interest is also piqued by the counter-cyclical nature of student housing, as students need accommodation regardless of whether the economy is booming or slowing down. ‘It is a defensive asset class that has had a steady yield profile of 5-7% and it is particularly attractive now that we are close to the top of the cycle,’ Robinson said.


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