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Poland top in the world for student housing yields

4 MIN READJuly 23, 2019


According to one report, Poland currently offers 6% prime net student housing yields; higher than anywhere else in the world. The continued and unwavering attractiveness of this countries asset class has people divided on what the key driving factor is, but what can be objectively observed is that the student housing sector exploded in CEE in 2013 and its not slowing down anytime soon. 
This was discussed at length at the senior real estate conference CEE GRI 2019, where the countries’ leading developers, lenders, and investors discussed a range of topics concerning the Central Eastern European market. 


How has student housing become so successful?

According to some of the attendees, one of the driving factors towards the success of student housing is the international student community. Despite a fall in the total number of students in Poland, demand for private as well as institutional student housing is on the rise, arising largely from international students. According to one report, the total number of students in Poland stood at 1.4 million in 2015 representing a decrease by 4% in comparison to 2014. However, this number is expected to bounce back to 1.49 million in 2035.

The growth of these two sectors go hand in hand - especially since they’ve grown in the UK, US and European markets recognising the importance of attracting international students as a way to fuel economic growth. Western European countries such as Germany, Holland and Spain have begun international marketing programmes with universities as a way to bring people into the country. 

In the beginning, an important contributing factor for international students coming to CEE countries was the 45% increase of courses taught in English since 2000 - which paired with much lower costs than UK or US tuition attracted a large number of undergraduates. Since 2007, the number of international students globally grew to over 5 million; a growth of 64%.


Supply and demand 

There is also the issue of supply and demand to consider. Due to improved social and economic conditions over the last 40 years the number of people attending university worldwide has exploded, and with this comes increased expectations of quality.
Griffin Real Estate was the first institutional investor to have acquired student accommodation in Poland, and since then players such as Golub GetHouse, Triton Academicus, Budner and Square Investment are following suit. 
At the moment, the demand is higher for 2 beds in a 20 sq/m unit, but all projections suggest the preference will shift to 1 bed in the same size unit in 5-6 years from now. According to some of the participants at CEE GRI, the developers should either design now so that later they’ll will be able to transform the room from 2 to 1 bed (because refurbished might cost up to 5,000 EUR) or they might decide to go with 1 bed and pay earlier, but perhaps charge more of a premium before the market catches up. 


Understanding students’ needs

One thing that developers often have in their favour is that students have one unique quality that sets themselves apart from all people around the world trying to rent or buy. Which is while everyone else finding a place to live have a multitude of preset preferences, students care way more about choosing their degree and university, and a place to live is very much a second thought - according to a report by Colliers.

One side effect this does have is that student housing brands often don’t carry much weight as students don’t pay attention to that, and will simply gravitate towards the cheapest and closest. However, it is worth noting that students are willing to pay higher rents for bedroom of higher quality generally found in the private market. It is worth observing that purpose built private accommodation is largely occupied by international students.

The student accommodation market in Poland does however remain in its early stages of development. The number of privately owned student accommodation is significantly lower than those offered by public institutions and the buildings are also much smaller. The number of established institutional investors in the student housing market is still relatively low, and instead the majority of the private market is made up of individuals. Private student houses owned by these individuals are quite often located in old buildings and in not particularly built up areas. This contrasts greatly to purpose-built student housing schemes, which offer prime locations and are specifically designed for students. Much like what companies like Unite did to the UK but on a smaller scale, the market for purpose built student accommodation has been discovered.

For more discussion on both CEE markets and the rise of student housing, Europe GRI takes place on 11-12 September in Paris and GRI Residential Europe takes place on 26-27 November in London. 

Article by Matt Harris

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