Savills sees opportunities in French student housing

The French student housing sector will be an increasingly attractive niche market for real estate investors due to undersupply, rising student numbers and the need for better management standards, according to new research by Savills. Guaranteed rent is a further incentive for investors, with rents ranging from EUR 122 per month for a room in standard public sector housing to EUR 800 per month for a room in a principal university centre. Savills identified yields between 5.5% and 7% in the sector. Current capacity is estimated at housing only 10% of the student population, with capacity in the Ile-de-France region around Paris dropping as low as 5%.

Pascal Rupert, director of Savills, commented: 'Traditionally, much of the student accommodation stock in France was provided by the public sector, but recently the number of private developments has increased. The inadequacies in the existing stock have led to public authorities introducing tax incentives to encourage private construction. Currently there are three private student residences being built for each public sector residence. In 2007 there were the student housing stock was made up of 530 public and 650 private residences.'

Some investors have already begun to respond to the shortfall. Gecina Group acquired four new student residences in Bordeaux for EUR 28.5 mln in October 2007 and Icade, another French group, acquired the majority capital holding in developer Opera, adding approximately 600 - 800 new rooms per year.