German student housing sector attracts record investment - Savills

German student housing attracted a record investment volume of €200 mln in 2014, according to a new report by property adviser Savills.

This was by far the highest volume of investment to date for this type of accommodation.

The student housing market in Germany has experienced a boom in the construction of privately financed and operated student apartments over the last five years. This, in turn, has created increasing levels of investable stock.

'The sharp rise in private supply is attracting new players to the investment market,' said Marcus Roberts, head of student investment at Savills. 'Notably, pension funds and insurance companies are increasingly acting as buyers for the first time in this market. But we are seeing increased interest from the sector from overseas investors/operators looking to grow their existing platforms.'

Student number
German universities have recorded a significant increase in student numbers in recent years, due not only to the abolition of military service in 2001, but also to the growing numbers of international students choosing to take up their studies in the country.

Student numbers have reached a new peak for the winter term 2014/2015. Almost 2.7 million students are enrolled at German universities and colleges. This is 3.1% more than in the previous year.

Currently almost 12% of all students across Germany’s 740 universities come from abroad. The real driver in the growth of the private student housing market has been the lack of choice of accommodation types for this growing number of students. In response to this demand, private investors are filling the gap in the market and building new properties on a large scale, offering a quality new build product which is well managed and maintained and meets both domestic and international student needs.

Matthias Pink, director and head of research at Savills in Germany, commented: 'In 2010 there were just 12,000 places from private landlords in the 30 largest German cities. Since then the private stock in these cities has doubled to around 25,000 places, and it is foreseeable that, taking into account all properties under construction and in planning, the stock levels will grow to around 41,000 places by 2020.'

The proportion of student accommodation provided by private operators in the 30 largest university cities is expected to rise to approximately 22%, compared to the current supply of around 16%. This still remains below the levels seen in the more mature markets in the US and UK.

Click here for a PDF of the Savills report on the German student housing market