Deutsche Real Estate Funds (DREF) has acquired a student residence in the northern German university city of Kiel with a market value of €20 mln.
Deutsche Real Estate Funds (DREF) has acquired a student residence in the northern German university city of Kiel with a market value of €20 mln.
The deal brings DREF’s student housing portfolio to €200 mln. The company has also secured existing and development properties with a value of approximately €100 mln.
The Kiel asset is a development property consisting of 208 units that the company purchased from a Hamburg property developer. DREF, whose shareholders include London-based Internos Global Investors and Somerston Group, earlier purchased five existing properties with the issue proceeds of a bond placed in June.
'The new Kiel-based property is a very good supplement to our existing portfolio which targets in particular students on the lookout for high-quality but affordable accommodation,' said Felix Bauer, Chief Executive Officer of Deutsche Real Estate Funds Advisor (DREFA). An enormous supply gap exists in Germany in the medium-price segment, he added.
While student housing is an established property asset class in the US and UK, the market is now also gaining pace in Germany. In 2014, investment volume totalled €232 mln, the highest recorded to date, and up by around 40% year-on-year.
At present there is a huge supply gap between the volume of student accommodation and number of students in Germany. The total number of student resi units in the country is put at around 314,000 versus 2.7 million students. Due to an enormous backlog in terms of modernization and rising student numbers, Germany is a market with great potential for private investors, Bauer said.
The student residence in Kiel is located in the immediate vicinity of the near the applied science department at the university campus, where the number of students has almost doubled in the past 25 years. Since the last winter semester, more than 25,000 students have enrolled in Kiel – an all-time high. Meanwhile the volume of available accommodation is below the national average which means that the level of demand for affordable student accommodation is high.
Kiel is the capital of the federal state Schleswig-Holstein. With approximately 250,000 inhabitants and a GDP per inhabitant that is more than 10% above the national level, it is an economical as well as educational centre in northern Germany.
Over the past 10 years DREF and its management team have been engaged in the development, financing, modernisation and management of about 2,500 student residence units worth almost €200 mln. DREF covers the entire value-added chain from the selection of properties through financing to modernisation and subsequent management.