The annual turnover in graduating tenants enables owners of student beds in Germany to introduce annual rental increases, in stark contrast to the more tightly regulated situation for long-term tenants in the mainstream residential sector, according to Thomas Landschreiber of Corestate Capital Advisors.

The annual turnover in graduating tenants enables owners of student beds in Germany to introduce annual rental increases, in stark contrast to the more tightly regulated situation for long-term tenants in the mainstream residential sector, according to Thomas Landschreiber of Corestate Capital Advisors.

Corestate Capital, a private equity property investor headquartered in the Swiss city of Zug, is a major backer of the nascent student beds sector in Germany via its majority ownership of Frankfurt-listed developer-owner Youniq, which has 2,500 student apartments either under management or in construction phases across several German cities.

In a video interview at PropertyEU's latest German investment briefing, Corestate chief operating officer Thomas Landschreiber said the student housing sector is still just a niche in Germany, but one with very interesting growth potential. 'The surprising thing is that there is no owner of student homes operating on a nationwide level,' he said. 'If you have a look at other countries like France or the UK, you have London and Paris but in Germany you have more than 65 cities where it is interesting to build student homes. It may be a niche market but it is one in which you can deploy a lot of money.'

Student accommodation, Landschreiber said, is related to the mainstream residential rental market but has some unique features. 'We have occupancy of 99.5% and 100%, and nearly no rental loss because we have the guarantee of the parents for every lease.'

Landschreiber said that student housing is made more interesting because students who graduate move out and new tenants take their places. 'This is not a risk but an opportunity. There is turnover (in tenancies) of about 30% annually and that allows you to market rents: you can increase rents by 2%-4% each year, something which is not normally the case in the residential business in Germany.'

Click on the link to watch the interview with Thomas Landschreiber

A feature on the growing interest in student beds appears in the May edition of PropertyEU Magazine