MPC Capital rolls out new student housing brand in Germany

MPC Capital, a Hamburg-based investment manager with some €2.9 bn of assets under management, is rolling out a new student housing brand in Germany under the name StayToo.

One of the first projects is located in Nuremberg where the company recently acquired a plot. ‘We intend to roll out 1,000 beds for the 2016 academic year and a similar number for the year thereafter. We’re applying a hurdle of a minimum 10,000 students per residence which leads us to 55 cities in Germany,’ Rainer Nonnengãsser, head of the Micro Living division of MPC Capital said.

According to Nonnengasser, MPC is concentrating on two types of location: metropolitan areas like Hamburg, Frankfurt and Cologne and traditional university cities like Munster, Heidelberg, Darmstadt and Freiburg. ‘We are currently looking into both. We aim to build up a portfolio blending the two: the more liquid metropolitan spots and the pure university spots, we feel both are economically attractive.’

The market opportunity in Germany was ‘obvious’ he said. ‘We have 2.7 million students in Germany, the vast majority of which have to organise their own accommodation. Most of them crave a type of accommodation that combines individuality, community and affordability. This is the value-add formula underlying our approach.’

Enhancing the market’s potential are the increasing numbers of foreign students coming to Germany and the fact that student housing is by far a pioneering sector, he added. Foreign students currently account for less than 20% of the total in Germany, compared with between 85-90% in some cities in the UK, notably London.

Nonnengasser highlighted two key differences with the UK. ‘The German market is immature in its development – that’s one thing. Secondly we have the biggest student market on the continent after France with 2.7 million students. But we have a limited and outdated offering which is primarily dorms, and there’s a huge gap between demand and supply.’

In terms of regulations, student housing in Germany is subject to the same building requirements as residential property, ‘which makes every square metre more costly than in the UK on a like for like basis,’ he added.

Watch an interview with Rainer Nonnengãsser and other student housing experts on PropertyEU TV's YouTube channel.