Recent comments

Despite a drop in residential sales, the market remains in a state of equilibrium
25 July 2019
Katarzyna Kuniewicz

Developers still doing well
25 April 2019
Kazimierz Kirejczyk, FRICS

Łódź: the shining star of the development market in 2018
6 February 2019
Agnieszka Mikulska

The housing market in 2018: a thriller with a happy ending
22 January 2019
Katarzyna Kuniewicz

Summary of 2018 on the primary residential market
31 December 2018
Kazimierz Kirejczyk, FRICS

Student housing as recipe against an inexorable demographic shift

19 August 2015

The number of students in Poland exceeds 1.5 million a year, which stands for a top rank among EU member states. At the same time, there are only 504 university halls in the whole country, satisfying merely 8.8% of the student accommodation demand. The first significant investments confirmed that there is no lack of demand for this type of accommodation. Even more, the growth prospects of the student housing segment in Poland are bright.

Large cities are competing for the youth. In the light of a decreasing number of residents, to attract new students is an opportunity for local governments to reverse unfavourable demographic trends. Special motivation programs are being set up for domestic secondary and tertiary graduates in order to encourage them to settle down in a specific city. In terms of the income for universities, foreign students are especially demanded. This gets clear when you look at such programs as “Teraz Wrocław” (Wrocław Now), “Study in Lublin”, or at the presence of Poznań at the Master Study Fair in Berlin. To attract foreign students is a true matter of survival for academic centres. Attracting valuable students from abroad paves the way for a university to obtain proper didactic and research facilities, undergo a series of economical (EU funding, grants, etc.), technological and social changes. However, in order to participate in such programmes as, for instance, Erasmus, it is necessary to ensure a proper infrastructure – comprising attractive student accommodation.

Student halls or flats?

Cities have something to struggle for. Poland has one of the largest populations of students in Europe. The number of students at Polish universities exceeds 1.5 million a year. At the same time, there are only 504 university halls in the whole country, offering a total of 136,905 beds. This means that student hostels caters merely for 8.8% of the entire demand for student accommodation facilities. Not only are they very few and far between, but most of these buildings, erected in the time of the Polish People’s Republic, are well past their prime. There are very few modern facilities that can guarantee a decent standard. We also need to remember that the youngest group of students today includes people born in 1995-1996, and they expect and appreciate comfort. They care about convenience and a fair standard of living. The price is no longer the basic criterion that determines their choice. Ultimately, the majority of students currently decide to rent flats from private owners. Although this option is much more expensive and offers quite insecure tenancies, often taking place in the absence of appropriate legal regulations on the still immature rental market in Poland.

Foreign students shape the demand

A stable student population in the main Polish cities, combined with small housing resources, makes the student housing segment a very attractive field for investments. In terms of number of students, Warsaw with more than 255,000 students outperforms Barcelona. Kraków in turn, with its 170,000 students, is on a par with Berlin. In other cities such as Wrocław (125,000), Poznań (121,000) or the Gdańsk-Sopot-Gdynia Tri-City (95,000), the numbers of students are also high. It should also be emphasised that these numbers also rise dynamically in the proportion of foreign students, which is a key factor determining the demand in the field of housing investments targeted at students. In 2013 alone, the student lists of Polish universities included 36,000 foreigners, thus yielding a 23% increase year on year. The number of foreign students has more than quadrupled over the past decade. Moreover, Poland attracted more than 10,000 Erasmus students, and this trend continues to rise.

Cost-effective investment

The student housing sector has all it takes to become a significant asset class for investors in Poland. A strong rationale for investing in this segment is the enduring nature of the institutions that it caters for. Student accommodation can produce rental income flows that generate high profits for investors. Even though student lease is usually short-term, the flow of revenues is stable due to the scale and stability of the demand and limited supply of such flats. The first significant investments, such as the Polonez Academic Centre by Griffin Group, confirmed the large-scale demand for this type of accommodation on the market. Students appreciate both the decent standard of modern investments and the secure and credible rental offer from a professional property manager. Nevertheless, there have not been any significant institutional investments in this segment, yet.

However, everything seems to indicate that this segment of the real property market is on the verge of a large-scale growth. This may be manifested by the recently growing number of investors analysing the market in the search for new investment opportunities. Investors and developers are contemplating both independently carried out private student housing schemes and investments in partnership with universities.

A crucial role is played by convenient location that is likely to attract and to remain the interest of students in the future. The reason for this is that student accommodation schemes are seen as long term rental assets. Closeness to university campus and a easy access to public transport are integral success factors from a location point of view. Other key characteristics of investments include a wide spectrum of services available in the vicinity, a decent and contemporary standard, attractive public space, and fully-equipped flats.

---

To sum up, the potential of students as a group has already been noticed by developers, by offering flats on favourable terms or by preparing offers for individual investors who contemplate purchasing flats for students to rent. The generational change that we are currently experiencing, manifested in a different attitude and expectation of young people towards quality standards and in the better awareness of their own needs, means that more and more attention is being paid to projects in which student-dedicated solutions, reliable administration and friendly peer environment prevail over the offer of private owners. Another contributing factor in this regard is a competitive rent level.

On the one hand, Poland’s large academic centres have a huge need for attractive student accommodation facilities. On the other hand, this type of projects makes a very interesting opportunity for investors. Stable populations of students in such cities as Warsaw and Kraków, as well as the growing number of foreign students, create a firm foundation of demand for this type of housing investments. Moreover, they promise high returns on investment for large institutional investors who decide to take a plunge into this segment of the Polish market.