Articolo

Developers build on Southern Europe's student housing sector

More student housing developments are appearing across Southern Europe to meet growing demand.

18 settembre 2019

Student housing developers are targeting Spain in record numbers as they seek to take advantage of growing demand from cultural shifts across Southern Europe.

In a break from tradition, more and more students across southern Europe are choosing to live away from home during their university years. In the Spanish market, 491,116 young people needed accommodation for the academic year 2018/19, equating to 30 percent of the total number of students in Spain, according to estimates from JLL.

“Spain is suffering from a severe lack of student housing which meets both the expectations of international investors as well as overseas students,” says Nick Wride, Head of Living and Alternatives, JLL Spain. JLL estimates a shortfall of as much as 400,000 between supply and demand of accommodation.

Purpose-built student accommodation is being developed at unprecedented levels in order to meet demand. There was a record 18 transactions of greenfield and brownfield development in Spain in 2018, reflecting a volume of €141 million, the largest ever recorded, according to JLL data.

With limited existing investment opportunities for operating assets in Spain, the focus has so far been on development, says Wride,

“Entering the Spanish market has been about finding the right partners who can develop and then operate assets,” Wride says. “That then gives investors the chance to build out platforms across the country.”

More joint ventures

Global Student Accommodation Group and Harrison Street announced a joint venture worth at least €750 million in Spain earlier this year, while Urbania International subsidiary Syllabus entered a joint venture with Invesco to invest €250 million over the next five years in development and repositioning of existing buildings. The partnership aims to provide 4,000 beds across Iberia.

Meanwhile, Greystar’s 2017 purchase of RESA – Spain’s biggest student housing operator – expanded its portfolio. The vehicle, backed by AXA and CBRE Global Investors, intends to add 2,000 beds to its existing 10,000 portfolio in the next three years.

With yields compressing by 25 basis points last year to around five percent, Wride says investors are drawn to the disparity between Spain’s low supply and its growing number of domestic and international students.

Portugal and Italy follow suit

In neighbouring Portugal, more than 10,000 new beds are already in the pipeline for both Lisbon and Porto, most of which are being built by international operators in partnership with Portuguese and foreign private developers. A joint venture between Round Hill and TPG Real Estate last year bought a 39,000 square metre site at Campo Pequeno in central Lisbon. The partnership will create 390 beds.

In Italy, sector specialist Collegiate recently announced plans to enter Italy in a partnership with real estate fund manager Proprium Capital Partners. Around 3,500 new student bedrooms will be developed by the partnership over the next three years, with the first project being a 700-room residence in Milan.

“As more and more assets currently under construction become a reality and investors then see the product in operation, capital will flow,” Wride says.

Greater availability of sites in Spain’s regional cities has been an important factor in increasing the amount of development beyond Barcelona and Madrid.

However, across southern Europe, more assets with ticket sizes of above €50 million will need to become a reality for greater levels of institutional capital to be attracted to the market and repeat the trends witnessed in more mature markets, such as the UK.

“Potential is certainly high,” he says. “It may take time, but we are going to see more trading in the medium term.”

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