Page 13 - bne_newspaper_April_26_2019

Central Europe
April 26, 2019 www.intellinews.com I Page 13
Investors look to recession-proof student housing market in CEE
Clare Nuttall in Glasgow
The private student accommodation segment in Central and Eastern Europe (CEE) is in its infancy compared to the much more developed markets in Western Europe and in particular the UK, as re- ported by bne IntelliNews. Yet as the numbers of international students in the region increase, the potential market for private purpose-built student accommodation (PBSA) is growing, as revealed by a new study from Colliers International and law firm CMS.
The study looks at potential demand over the next ten years, extrapolating recent growth trends, which would see a further increase in interna- tional students. Scenarios range from 10% to 50% of international students looking to rent a bed in
a PBSA unit. It projects that the shortfall in total supply of new beds across seven major cities in Central and Southeast European countries would range from 5,931 beds to as high as 53,307 beds. Warsaw, Budapest, Krakow and Prague are ex- pected to be the as most under-supplied in the coming years.
Looking at the size of the marketplace, the CMS/ Colliers study projects the value of these short- falls to range from €422mn to as high as €4.0bn assuming one-bed units (or €281mn to €2.7bn based on 1.5 beds per bedroom unit).
In western Europe’s footsteps
As with many other sectors, the student accom- modation market in CEE is expected to follow the same broad trends as that in Western Europe. “Student accommodation has been one of the most successful of the new options for investors and developers in Western Europe to consider over the past ten years. We believe the next ten
Student Depot's student house in Lodz, Poland, one of just a handful of private purpose- built student accommodation in the CEE region.
years will see this new opportunity, alongside
its residential peer sectors such as micro living and senior housing, spread into the CEE region,” says the report, which looks at accommodation in Bulgaria, the Czech Republic, Hungary, Poland, Romania and Slovakia.
At present, however, the “supply of PBSA in the core CEE-6 markets is currently limited to 20 assets,” said Wojciech Koczara, CEE head of real estate and construction at CMS. Its slow devel- opment compared to Western Europe is due to a combination of factors: “lack of affordability, the availability of very cheap but low quality private houses and state-owned dormitories and tight university budgets.”
“But with eight presently under construction across Warsaw, Krakow and Bucharest, development ac- tivity in the sector is growing — although arguably at a pace slower than needed, as investors begin to realise the sector’s potential,” adds Koczara.
CMS and Colliers carried out a survey among 68 investors from across CEE, Western Europe and North America. Of those, 32% were already active in the sector in CEE or said they intend to become active.
Just 11 were already active in the sector in CEE. However, of the 57 not investing in CEE PBSA yet, four are active in the sector outside the region. Asked whether they planned to invest in the sec- tor, among the 57 respondents not already active in CEE PBSA, 11 said they were planning to invest in the sector, 30 were not, and 16 gave no answer.
Read the full story here