Savills has identified a growing supply/demand imbalance in the Netherlands student housing market, which is creating investment opportunities in this niche sector.
Savills has identified a growing supply/demand imbalance in the Netherlands student housing market, which is creating investment opportunities in this niche sector. According to the international real estate advisor a further 80,000 new student housing units will be required by 2020 to meet rising demand, as an additional 150,000 student registrations are expected over the next seven years.
Current supply of housing for the 668,000 registered students in the Netherlands is shared between social housing corporations, the private student housing market and the open housing market. In response to this rising demand, in November 2011 the Dutch government introduced plans to lift certain building regulations to facilitate the construction of 16,000 new student rooms by 2016. These will be developed by social student housing corporations, however they will only go some way to fill the 80,000 unit demand.
Marcus Roberts, head of student investment at Savills, comments: “In keeping with past economic downturns, student numbers in the Netherlands have grown in the weakened labour market. This has created a window of opportunity for investors to address the imbalance of student housing supply and increasing demand.”
New schemes currently being developed include Villa Mokum in Amsterdam, purchased by Syntrus Achmea comprising 279 student houses and Axcellent’s Amsterdam-Southeast development of 700 apartments. Green Real Estate has also acquired the 5,000 sq m Anna van Bueren building in The Hague to provide 396 student apartments for Leiden University.
Savills research finds that student housing rental growth has remained positive throughout the Netherlands and expects this upward trend to continue into 2013. In the private rental market students pay on average between €310 per month for private student halls and €360 per month for solitary rooms and flat shares, while on the social housing market levels are lower due to strict regulations, averaging at just over €200 per month. In Amsterdam monthly rents in the private market exceed €450.
With market evidence still sporadic Savills expects gross yields for prime student residences to continue to range between 5.5% and 6.5%, depending on location, asset quality and rental contract. This is lower than current achievable yields for prime offices (at 6.4%) and shopping centres (at 6.5%) in the Netherlands showing the potential strength of this asset class. For secondary student residences gross yields can reach 7.5%.
As the capital city, Amsterdam has the highest number of students and universities in the Netherlands, accounting for 23% of the country’s student population, followed by Utrecht (13%) and Groningen (11%) according to Savills.
Jeroen Jansen, head of research at Savills in the Netherlands, says: “As well as a growing number of local registrations we are seeing rising levels of international students largely due to low tuition fees and the introduction of more English-language courses.”