French student property — a profitable investment

Investment in student accommodation France decreased from 211 million euros in 2013 to 55 million euros in 2014. However, in 2015, according to forecasts from Savills, investment will increase to 80-100 million euros. The market is dominated by local investors, whose share was 72 %. Among foreigners, many citizens of the Netherlands (16 %), UK (7 %) and Germany (4 %).

To invest in student accommodation France is advantageous for several reasons:

— The increasing number of students. France is the most popular country among international students after the USA and the UK. In 2013 in France, there were about 300 thousand foreign students. Their share of total enrolment increased from 7% in 1998 to 12% in 2013, according to forecasts, by 2025 will reach 17 %. Now dominated by Moroccans, however, in the next two years ahead of the Chinese.

The total number of students in France is growing every year. According to the Ministry of education in September 2014 applications for admission to universities filed of 2.47 million people, which is 1.5% more than the year before. Over the next 10 years, the number of people applying to French universities, will increase by 9% to 2.65 million

— High demand for housing. More and more students prefer to leave home. The proportion of those who live with their parents, in 2000 accounted for about half of all students, and in 2013, decreased approximately to one third. Others prefer to rent apartments. Less popular University dormitories (the reason — lack of space).

The demand exceeds the supply. Only Fund student housing 375 thousand rooms, of which 58 % public housing managed by the CROUS network. At the same time in housing need about 1.6 million students. For the next five years is planned to build only 9 332 housing units in this sector, 3 of which 800 will be built in 2015.

Most projects under construction for student housing has the île-de-France: in this region, will be erected 32 % of the projects. Among other key locations — Moselle Department in North-Eastern France (16% of approved projects), Marseille (13 %) and Toulouse (12 %).

— High occupancy rate from 94% to 100% depending on the location and quality of the building.

— Rising rent. Over the last 12 months the rent went up 3% in Ile-de-France and 2% in other regions. Student apartments are priced from 457 euros per month for a Studio up to 542 euros per apartment with one bedroom. In Paris the average cost studios more than 650 euros a month, one-bedroom apartments — 1 200 Euro.

The duration of the rental contracts student housing — 9 months. This means that to adjust rents frequently than in the leasing of retail and office properties, contracts which are reviewed once a year or less.

— High yield. The profitability of student housing is higher than the yield on other types of real estate. In France, student apartments bring the 5.3 – 6.7% per year, shopping malls — 4,2 – 5,5 %, offices by 3.7 to 4.5 %.

Yulia Kozhevnikova, “Tranio”

According to the materials of Savills

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