Investors Search for Yields in Germany's Student Market

Posted by Richard Ward in ,

Image courtesy of Flickr, Creative Commons

Overseas investors attracted by high yields not available elsewhere are being drawn into the Germany student property market.

Student housing in Germany has tended to be highly subsidised and is home to around 2.9 million students, with around 25% of those coming from outside Germany.

However, unlike other markets students in Germany have tended to rent private flats or share apartments off-campus, with only 11% estimated to be living in designated accommodation. This is a trend that's expected to change in the next few years.

It's expected that investment transactions in student housing could rise to around 1 billion euros in 2016, up from the 300 million euros that's usually seen over the course of 12 months.

With international students increasing by around 5-10% a year, private companies are stepping in to fill the shortage in housing.

In Germany furnished micro-apartments at 172 square feet are exempt from German rent control, which provides investors the opportunity to charge more than twice the average local rent and three times a publicly subsidised student home.

Student housing offers one of the most yield-generating segments for investors per square metre and those that can provide high quality amenities and close proximity to campus have somewhat been able to justify the higher price.

Global Student Accommodation, which already manages 50,000 student beds worldwide, purchased 1,500 beds for its Germany student housing portfolio in July. Housing firms are hoping that the Germany market will follow in the footsteps of the UK's, which saw investment in the sector reaching $7.4bn last year.