Copenhagen leads the way for student housing investments


24 / 02 / 22 - 5 minute read

PATRIZIA is moving strongly into the student accommodation market with recent purchases of assets in Copenhagen, Hamburg and Dublin. The company is also investigating opportunities in Italy, Spain and the Netherlands.

Copenhagen University has comfortably positioned itself as one of the best universities in continental Europe, even reaching pole position in CWTS Leiden’s 2021 Ranking. Its students can achieve academic excellence while enjoying incredible quality of life, possibly riding their bike after lectures or taking a dip in the city’s Harbour Baths. Aware of its attractions, an increasing number of international students are flocking to the city. There’s just one drawback: the severe shortage in student accommodation. 

It’s precisely this growing demand and diminishing supply of available student accommodation that prompted PATRIZIA AG to buy Blaekhus, a Danish student housing brand and its portfolio, from Deutsche Finance International for €314 million in January. The 40,500 sqm sale includes 1,186 beds, dedicated social and study spaces, as well as additional commercial space of 3,800 sqm.

Louise Hertz, Country Manager PATRIZIA Denmark, said: “This transaction is significant as it marks the largest student housing portfolio deal in Denmark to date.”

Brand is good to go

Six of the assets are located in central Copenhagen, while the seventh is in Aarhus, Denmark’s second largest city. All seven are either newly built or set to be completed this year and lie within easy walking distance of the university, local amenities and transport links.

“These microsites give you decent exposure to prime locations, which is particularly valuable in the Nordics, where it can be difficult to find the right stock in the right place,” said Antonio Marin-Bataller, Director, pan-European Transactions at PATRIZIA.

As well as accessing prime locations, PATRIZIA benefits by buying a readymade student portfolio and an established brand. Moreover, the Danish student sector received substantial government financial backing during the corona pandemic, commented Marin-Bataller. “In other words, we’re entering a market that has supply deficiencies and economic support and is also attracting an international audience.”

Unlike other countries such as the UK or Ireland, Denmark’s student housing sector provides an additional layer of security: it offers a flexible use class, which incorporates residential use. This means you can always attract professionals who are happy to live in a micro apartment.

Moving forward, PATRIZIA will eye further student housing investment opportunities which come up in greater Copenhagen, Aarhus, and Denmark’s larger university cities, adds Hertz

Everyone in the market says that student housing is a great place to fish.

Antonio Marin-Bataller, Director, pan-European Transactions at PATRIZIA

Seeking European investment targets

Denmark isn’t the only country where the student housing market is of interest to PATRIZIA. Demographic changes fuelled by urbanization are adding to structural shortages in purpose-built accommodation, as more and more people flood to big cities and choose to stay longer in education.

Moreover, heavy equity demand and compressing yields in the residential sector, coupled with potential increases in interest rates, are further encouraging institutional investors to move away from residential and instead pile into alternative forms of living, such as student apartments, senior living or micro apartments to diversify their portfolios and to enhance their returns.

When COVID-19 hit, student housing occupancy dropped significantly in some countries. Nevertheless, pricing remained resilient, explained Marin-Bataller. “This caused everyone in the market to say that student housing is a great place to fish.” And while COVID-19 initially shelved life on campus across Europe, students are now returning in droves, eager to experience university life again.

Brexit has also impacted the sector as European students start to shun the UK and seek alternative universities in continental Europe to avoid paying full international fees and stop meeting complicated visa and entry restrictions. Take Dublin, for example, which welcomed 139% more European students following the UK’s exit from the European Union (EU).

PATRIZIA has already entered the Irish student housing market, buying two purpose-built student accommodation assets for €120 million in Dublin last December. This brings PATRIZIA’s investment in student housing to a total of €435m over the last 12 months.

And this trend is simply going to accelerate in future, said Marin-Bataller. “We expect this investment amount to increase over the next few years as we see the student housing market growing in Europe.”

PATRIZIA has also acquired a residential turnkey development opportunity in Hamburg, Germany. Scheduled for completion in autumn 2024, Urban.Isle Campus is aimed at students and young professionals and will provide c. 10,100 sq m of residential rental space across 469 fully-furnished, high quality micro apartments, with an average size of 23 sq m.

Nathalie Winkelmann, Head of Fund Management Residential at PATRIZIA, commented: “This transaction has allowed us to acquire a high quality residential property with a futureproof concept that taps into the demand from students and young professionals for micro living accommodation with excellent transport connectivity.”

This transaction is significant as it marks the largest student housing portfolio deal in Denmark to date.

Louise Hertz, Country Manager, PATRIZIA Denmark

Where to buy next?

So, besides the Nordics, which other countries offer the most interesting investment prospects in terms of student housing? PATRIZIA sees Ireland, as well as the Netherlands as two strong beneficiaries of the Brexit situation, as these are set to attract more EU students.

Spain is also interesting, as studying away from home – a familiar experience elsewhere, becomes more established. The rising mobility of Spain’s student population and the growing appeal among foreign students wanting to study there and take part in Erasmus+, the EU’s university exchange programme, is already luring investment in student dorms in Spanish cities.

PATRIZIA is also developing a business plan for the Italian student housing sector, which remains as yet untouched.

Meanwhile, as investors shuffle their real estate deck, more and more student investment opportunities are likely to appear elsewhere in Europe. 

Images: svetikd, Instone Real Estate / moka-studio