Universities in continental Europe are attracting more international students but the supply of purpose-built accommodation is lagging behind.
As a result, the sector is booming and investors in student housing continue to reap rewards, experts agreed at PropertyEU’s Student Housing Investment Briefing, which was held at the Mipim fair in Cannes last week.
‘European universities are stepping up to the challenge and competing with UK and US universities, markets are evolving incredibly rapidly and student expectations are also changing,’ said Phillip Hillman, chairman of the alternatives team at JLL. ‘The UK will lose market share. If you think Brexit will not have an impact on international student numbers then you are in cloud cuckoo land.’
The UK ‘has had a hell of a head start on the rest of Europe’, he said, and will continue to be a significant market with the benefit of transparency of transactions, a strong track record and some of the best universities in the world. But the point is that Europe is ready and willing to pick up market share: 10 years ago there were only 500 university courses taught in English in mainland Europe, now there are 6,000.
Massive undersupply
Yet the provision of student housing has not kept up. Just to give an example, while in the UK 34% of students can stay in purpose-built student accommodation the percentage in Italy is 2.6%.
‘Europe is massively undersupplied compared to the UK,’ said Charlie MacGregor, founder and CEO of The Student Hotel. ‘We are expanding into countries like the Netherlands, Germany, France, Italy and Spain because universities there now see the value of world-class accommodation.’
More and more UK-based providers are looking across the Channel, and seeking to use their expertise in the nascent but fast-growing European markets.
Round Hill Capital, for example, aims to have 20,000 beds across Europe’s gateway cities by 2020. ‘We are still bullish on the UK and still investing, but some parts of the market are overpriced, so we are also looking at Spain, Portugal, Ireland and the Netherlands,’ said Paul Bashir, COO of Round Hill Capital.
CRM Students is active in Italy, Spain, Portugal and the Netherlands and also looking at less obvious markets like Greece and Switzerland. ‘A lot of people are picking up on the simple fact that there is a lot of demand and little supply,’ said Keith White, group managing director at CRM Students. ‘We are a UK-based operating platform, but we are increasingly looking at Europe because we see the opportunities there, we understand the granularity of operating student housing and can deliver returns.’
