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European transaction volumes in student digs sector soars 29% to €13.6bn

By James Wallace - Tuesday, May 08, 2018 11:08

Transaction volumes in the European student accommodation investment markets soared 29% year-on-year to some €13.6bn in 2017, according to a Cushman & Wakefield, underscoring how student accommodation continues to mature into a mainstream real estate sector.

Shifting demographics and wealth distribution is driving continued growth in global demand for higher education, supporting investor appetite for the sector. Cushman said data transparency across the Continent remains in its infancy as the sector evolves, especially as many European countries also classify other micro-living concepts as student accommodation. As the sector continues to mature, further interest from global investors is expected to follow.

Among the fast-growing European markets is Germany, which has the largest student population in Europe, and has seen student numbers grow substantially relative to other countries over the past 10 years. The positive demand story and stable investment environment has seen a large amount of international capital looking to invest in the sector, with Brookfield, GIC, Allianz, BVK and Harrison Street all entering the market over the past 18 months.

Another market which has seen significant growth is Spain, where some €600m of transactions were completed in 2017, driven by the sale of two large portfolios to new market entrants: GSA, and a consortium of AXA, CBRE GIP, and Greystar. Spain remains an attractive market in which to grow scale, driven by internationally recognised universities, increasing international student numbers and low accommodation provision rates.

Although portfolio deals in mainland Europe have so far been limited due to a lack of developed stock in the market, Cushman expects that 2018 will see increased development activity backed by institutional capital.

Paddy Allen, partner at Cushman & Wakefield, said: “We now live in a world where the student population is more internationally mobile, more flexible and ultimately has more choice about what and how to study. The result is that customer demand for student accommodation shows no signs of abating any time soon.

“Due to the evolving nature of the sector across Europe and increasing capital allocation, investors must become more creative in how they invest to gain or increase exposure. Operational strategy is as fundamental as the bricks and mortar, and presents both a risk and an opportunity when investing into the sector. It is vital to both drive asset performance and access opportunities.

“Early mover advantage still exists in many European locations, with opportunities to introduce new product into fundamentally undersupplied residential markets. Cushman & Wakefield’s dedicated European Student Accommodation investment team has been designed to help investors take advantage of the evolving market across Europe.”

James Wallace is a freelance consultant and can be reached via Linkedin or email:

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