What are the prospects for investing in student housing in Germany and the UK?

Overview of the prospects for the student housing sector

According to an analysis conducted by PwC, 69% of investors are inclined to have a positive outlook on the future of the student housing sector in 2016, viewing it as quite promising, if not excellent. Among European countries, the UK and Germany show the greatest attractiveness for investments in this area. To determine where it is more advantageous to invest funds, it is essential to consider three critically important aspects: investment volumes, the level of demand from students, and the availability of housing.

Investment volumes

In the student housing market, the UK boasts investments that are ten times higher than those in Germany. However, in recent years, the German market has seen more consistent and stable growth in investments. From 2009 to 2015, the amount of investment in student housing in Germany grew quite dynamically, except for 2012, when a slight decline was recorded. While the UK experienced a decrease in investment volumes in 2013 and 2014, they significantly increased again in 2015.

This year has truly been a record one for both countries:

• In GermanyThe total amount of investments reached 525 million euros, nearly doubling the figures from the previous year.
• In the United KingdomThe volume of investments amounted to 5.8 billion euros, which corresponds to a threefold increase.

In the coming years, both the UK and Germany are expected to maintain and even increase interest in this real estate sector. However, in Germany, the volume of capital investments is likely to grow faster due to a steady increase in the number of students and a pronounced shortage of housing.

Demand from students

In Germany, there is a noticeable and faster-growing demand for student housing, driven by an increase in the number of students, including international ones. At the same time, the overall number of students in the UK tends to decrease. As of 2015, there are 2.7 million registered students in Germany, while in the UK, the number stands at 2.3 million.

It is worth noting that the share of international students in the UK reaches 19%, while in Germany it is only 12%. The total number of international students in these countries is often correlated with the number of internationally recognized educational institutions:

• United KingdomIt has 44 universities that are among the top 400 in the world, with around 436,000 international students.
• GermanyIt has 37 renowned universities and 320,000 international students.

In terms of the number of prestigious universities, the UK ranks second in the world, only behind the USA, while Germany follows in third place.

Factors influencing demand

There are many factors that have a multifaceted impact on the number of international students, including the number of reputable institutions and various other elements such as the cost of education. Lower tuition costs can significantly increase the attractiveness of a country to foreigners. The quality of educational services, availability of the language of instruction and living conditions for international students also play an important role.

Considering current trends, it can be confidently assumed that in the long term, the student housing sector will continue to actively develop, providing investors with new opportunities to invest in a stable and growing market that increasingly attracts students from around the world.

Availability of studying in Germany

The cost of studying in Germany is considered one of the least expensive in Western Europe. When taking living expenses into account, the total amount is about three times lower than in the United Kingdom. In recent years, there has been an increase in tuition fees in the UK, which raises concerns among students and discourages many from choosing this country for their studies.

Visa conditions and opportunities after studying

At the same time, the conditions for obtaining visas to Germany look much more favorable compared to those in the UK. For example, having completed their studies in Germany, students can stay in the country for six months in search of a job, while in the UK the rules for obtaining visas are stricter. After graduation, a work or business visa is required here, which creates additional difficulties.

Youth unemployment rate

Moreover, the youth unemployment rate in Germany remains at just 7%. In comparison, this figure is 11% in the Netherlands, and around 14% in countries like the United States, Australia, and the United Kingdom.

Conclusion

In conclusion, analyzing the student housing market in the UK and Germany, I have come to interesting conclusions that could significantly influence investors' choices. Although the British market significantly outpaces the German one in terms of investment volumes, it is important to remember that over the last decade, the German market has shown more stable growth rates. This fact cannot fail to attract the interest of potential investors, asstability— one of the key characteristics of a successful investment.

Demand from students

The issue of student demand is also at the forefront. The increasing number of students in Germany, including international students, makes this market particularly attractive. While the UK is facing a slight decline in the total number of students, Germany is growing rapidly, showing positive dynamics. In addition, the affordability of education in Germany, more loyal visa conditions andlow youth unemployment rateThey are creating additional incentives for foreign students choosing this country.

Factors affecting demand:

• Affordable education in Germany
• Attractive visa conditions
• Low youth unemployment rate

Housing supply

As far as housing supply is concerned, the situation in the UK is quite saturated and the market is unlikely to show significant changes at this stage. At the same time, Germany is just starting to develop its student housing sector, which offers many investment opportunities. The shortage of supply, along with the growing number of students, creates excellent prospects for investment growth in this segment.

Prospects for investors

Thus, considering all the aforementioned aspects, I can confidently say that for investors looking to invest in the student housing sector,Germanyrepresents a more interesting and promising market compared to the UK. Given the upcoming increase in the number of students and a greater shortage of offerings, a significant influx of investments is to be expected, which in turn will create extensive opportunities for long-term financing.