Student housing: trend towards high-priced single apartments. If we look at the offer development of private providers for student housing on the German market, according to Savills, there has been only one direction in the past years: Upwards. In Germany’s thirty largest university cities, measured by the number of students, more than 45,000 student units have been built by private investors since 2010. The offer has more than quadrupled. In mid-2019, the stock of private providers was at about 51,500 units.
“The new construction activity of private providers reached new highs in 2017 and 2018. In these two years, a total of around 14,600 new living spaces entered the market,” explains Matti Schenk, Senior Consultant Research at Savills. For 2020, more than 8,700 additional units are planned by the private sector, while non-profit and public bodies will probably only complete around 11,000 housing units – this would increase the market share of private providers to a third. While the market is expected to grow more slowly in the future, construction activity is only just beginning in some cities. According to experts, the offer will grow most strongly in Dortmund, Düsseldorf and Hanover. In Dortmund alone, private providers could create around 1,550 new student apartments by the end of 2022 – the private offer there would increase more than nine-fold.
“The high level of new construction activity in cities such as Dortmund and Hanover shows that private providers are expanding their involvement to include cities outside of the large metropolises,” explains Michael Gail, Director and Team Leader Investment Munich at Savills. While the construction activity in Berlin remains high, Munich is declining.
So far, the stock of private providers has been divided roughly equally into offers for all-in rents of more than 500 euros per month and bed and those that cost a maximum of 500 euros. 26 percent of the private portfolio costs more than 600 euros a month. For the beds which are currently under construction or planning, Savills estimates that around two thirds of all units are offered at all-in rents of more than 500 euros per month. Only 19 percent of the planned beds should cost 450 euros or less. In view of rising construction and land costs, it is unlikely that there will be more private offers at lower rents in the future.
Market volume: almost nine billion euros
With the growth of the private portfolio, the market for student housing has become interesting for more and more real estate investors in recent years. In order to be able to estimate how much capital can be invested in student housing, Savills has examined the size and structure of the investable portfolio. According to one estimate, all existing and under construction and planned private student residences in the top 30 cities have a market volume of around 8.7 billion euros. “The inventory should be worth around 5.9 billion euros“, concluded Gail. However, around two billion euros are attributable to apartments that are partially owned and play no role for institutional investors.
Savills plc is a global real estate service provider listed on the London Stock Exchange and part of the FTSE 250 index. Savills acts as an experienced consultant with over 160 years of expertise and experience in real estate in the local & international real estate market.
This page is also available in: Deutsch