Student and senior housing tipped in Germany

Investors interested in the German market should look to alternative asset classes such as student accommodation and retirement properties for high growth returns, a panel of real estate experts has said.

A lack of supply in student housing and a continuing trend of increases in the number of students has created an excellent opportunity for investment and development, one panellist told the audience of real estate professionals.

Corestate Capital Advisors managing director Sascha Wilhelm said: ‘Student housing is definitely an upward trend in Germany, we think this is a very attractive alternative and the returns are significantly higher.
‘This is driven by an increasing demand in Germany; we’re thinking about 50,000 to 100,000 student dorms are missing at the moment, an investment volume of around 8bn EUROs, but the public institutions are simply not able to satisfy the demand’.

Wilhelm’s comments were made during a panel discussion on opportunities in the German market, as part of the PropertyEU Germany Investment Briefing held at the central London offices of Colliers International in September.

Student numbers have increased from around 1.7 million in the 1990s to 2.5 million students in Germany today, but supply has stayed at the levels set at the end of the 1990s when a raft of publicly-funded dormitories were built.

The senior care housing sector has also shown strong signs of growth, the audience heard, due to a relative lack of activity until now and perceptions about operating difficulties being enough to put some investors off.

SEB Investment head of real estate investment Nils Hubener said: ‘This is certainly something where there is potential. I think a lot of investors have been held back by the fragmented operating side of it. More investment from an institutional point of view is going to take some reorganisation on the operational side; it’s going to happen at some point because demand is there and it’s growing’.

Ignaz Trombello, head of investment Germany at Colliers International added that while there was a huge opportunity in senior care, investors should still be mindful of the complications involved.

He said: ‘If the covenants in these units are good then there is a chance to get very high returns from the investor side, if you have the knowledge and if you are prepared to take some risks. You have to be prepared to change your asset manager if it is not working’.