Real Asset Insight #6 June 2020

‘Some difficulties but no
collapse’ in student housing
Investors continue to have confidence in sector
as competition expected to increase in 2021
‘There is more
confidence in
student housing
than in other
asset classes like
retail or offices.’
Samuel Vetrak, Bonard
Investors continue to have faith in student
housing as a resilient sector, experts have told
Real Asset Insight.
‘Institutional investors are sure they will get
their long-term returns,’ says Samuel Vetrak,
chief executive officer of Bonard. ‘There is more
confidence in student housing than in other
asset classes like retail or offices and no desire
to divest.’
In Asia, the first region to experience the
pandemic and recover, ‘student housing has
gone from bottom of the list to third most indemand
asset class by investors with capital to
allocate’, he adds.
INTENSIFIED COMPETITION
The same trend is likely to be seen in Europe
next year. ‘We anticipate that there will be more
players in 2021 and competition for student
housing assets will be intensified,’ Vetrak says.
The expectation is that the negative impact
the pandemic is having on the sector will be
short-lived. Some operators are experiencing
cancellations, deals and transactions have
paused and opportunistic investors are on the
prowl for bargains.
‘Unlike the hotel sector, student housing is
experiencing some difficulties but no collapse,’
Vetrak continues. Another sign of optimism is
that ‘developers are not concerned and continue
to work whenever possible’. There is a pipeline
of 725 new projects being developed in Europe,
some of which will be completed this year.
Rents have remained stable and they are not
expected to drop. ‘Some operators have tried
rental discounts, but this strategy doesn’t seem
to work,’ says Vetrak.
Looking ahead, there is a big question mark
over the autumn term as universities have to
make decisions about when to open. ‘About
90% of stakeholders we have contacted expect
a return in September/October,’ he adds.
‘There has been only a slight or no decrease
in accommodation bookings, and some places
have had more bookings than they did by this
time last year.’
With Visa and consular offices closed in many
places and restrictions on flights, it will difficult
for international students to travel. In the short
term mobility and exchange programmes such
as Erasmus will be limited, so the market will rely
much more on domestic students.
Micro-living set to become more important as an asset class
Micro-living and other PRS products
will become even more important
after the crisis.
‘The one sector that won’t be affected by
the pandemic is residential, as the
importance of home has been highlighted,’
says Philip Hillman, chairman, living capital
markets, at JLL. ‘That’s why we’re seeing a
positive response from investors in the UK
and in Continental Europe.’
Long-term trends will reassert themselves
after the crisis, with young professionals
moving to cities, returning to being mobile
and more likely to rent than to buy, both
for affordability and lifestyle reasons.
AFFORDABILITY SOLUTION
‘Micro-living is part of the solution to
overcome affordability problems in
booming cities,’ adds Rainer
Nonnengässer, chief executive officer of
International Campus. ‘I’m sure that this
asset class will become even more
relevant in the years to come.’
Urbanisation is unstoppable and
42 Real Asset Insight | Issue 2 July 2020