Hamburg-based asset and investment manager MPC Capital has expanded the investment volume earmarked for its Staytoo student housing platform to €150 mln.

Hamburg-based asset and investment manager MPC Capital has expanded the investment volume earmarked for its Staytoo student housing platform to €150 mln.

Formed in July 2014, Staytoo is a joint venture with Danish real estate investor Sparinvest Property Investors that focuses on German campus towns.

'Our intention is to offer students as well as young professionals affordable accommodation with high-end amenities everywhere in Germany,' said Rainer Nonnengässer, head of the Micro Living division of MPC Capital.

The first two projects are currently under development in Nuremberg and Bonn, and will be ready for occupation by the 2016-2017 winter semester. In addition MPC - which has some €2.9 bn of assets under management - is analysing locations elsewhere in Germany.

'It is important not to limit your investments to major cities. The square-metre prices for existing flats have increased considerably since 2009 – in some cities by up to 80%. The entry prices in metro areas like Berlin or Cologne are therefore very high whereas rental yields tend to be rather low,' he added.

The firm said it is keeping a close eye on the hidden champions among Germany's campus towns. These include economically up-and-coming cities with renowned universities such as Aachen or Bonn, Nonnengässer added. 'They offer a higher yield upside, comparatively speaking.'

The market opportunity in Germany is ‘obvious’, he recently told PropertyEU. ‘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 But we have a limited and outdated offering which is primarily dorms, and there’s a huge gap between demand and supply.’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.

Earlier this week MPC Capital also announced a new joint venture with Hamburg-based Becken focusing on the structuring of regulated investment funds with a core / core plus investment strategy. The Platform will primarily focus on office properties in Germany.

PropertyEU TV
Watch an interview with Rainer Nonnengässer talking about the micro living market in Germany on PropertyEU TV's YouTube channel