Patrizia Immobilien acquires a 300-unit residential portfolio

Patrizia Immobilien has acquired a residential portfolio comprising 300 student and business apartments in Leipzig and Mainz for €33m on behalf of a separate account mandate from an unnamed German pension fund.

‘Student residences and apartments generate a relatively stable and attractive return for our institutional clients, offering outstanding risk diversification and are, therefore, ideal for adding to investment portfolios,’ said Patrizia’s head of residential acquisitions, Christoph Langmack.

Patrizia started investing in Germany’s student housing sector in 2016 and has since invested around €130m in properties in Münster, Berlin, Hamburg, Leipzig and Frankfurt, Langmack told REFIRE: ‘I expect us to acquire two-to-three more properties this year with an investment volume of between €30m and €80m,’ he said. ‘We’re interested in any university city that is showing good growth, including in B and C cities. We’ve also just acquired 220 micro apartments in Sachsenhausen, Frankfurt. We see a lot of possibilities in the micro-living space, both for students and young professionals. While we haven’t developed micro-housing yet, it is something that we are considering in Germany.’

The majority of the latest portfolio is in the university city of Leipzig, with one property comprising 246 apartments in Johannisgasse offering around 6,300 sqm of living space. The property in Mainz is an existing building on Rheinallee which, after refurbishment, will offer 50 business apartments.

Patrizia has ramped up its exposure to student housing and micro apartments in recent years. Last year, it acquired around 350 apartments in Hamburg and Münster. Student housing in B and C cities has proven a draw to international investors as well, due to the higher returns of around 6%.

Student numbers soar

It is easy to see the attraction of student housing in Europe: student numbers have never been higher. According to Catella’s ‘Market Tracker: Student Housing Europe’, published last month, Germany has the highest number of students in Europe, at 2.7 million, and the second largest in the world after the US. The biggest increase in actual numbers, though, is in Austria (+65%) and Switzerland (+50%), followed by the Netherlands (+33%) and Belgium (+31%). Universities charging low fees and offering a wide-range of courses in English are seeing a big uptick in international student numbers.

For investors, a big part of the attraction is that compared to conventional accommodation, student housing is counter-cyclical, which means that during a recession, demand tends to rise, as enrolments at universities increase on the back of fewer employment opportunities, according to Catella. Equally, strong demand persists even in boom years, especially in big cities. In addition, short rental contracts means that landlords can quickly adjust rents in line with market trends, making the asset class a low risk choice for investors. All of these trends make the student housing asset category attractive, particularly for long-term investments, according to Catella.

Student rents continue to climb

Investors looking to beef up their exposure to student housing will be heartened by rising rents. Student housing rents vary massively across Germany, with students in Berlin facing the biggest increases. Indeed, rents in the city have risen more quickly than in any other German city, up 39% since 2011, according to a study of 160 German cities and student rents between 2011 and 2018, published last month by German housing portals wg-suche.de and ImmobilienScout24.

Rentsin Berlin typically cost around €363 per month for a room in a shared house (WG) or €438 for a 30 sqm apartment, a price hike of 6% y-o-y, according to the study. Students in WGs or single apartments face the heftiest rent in cities such as Munich, Stuttgart, Frankfurt and Hamburg. A student looking for a single apartment or large room in a shared house of at least 25 sqm in Munich, which is also close to the university, will need to be prepared to shell out around €785 a month, including utilities, for an apartment or €616 for a room in a shared house, an increase of 6% y-o-y and up 35% since 2011. By comparison, Dortmund is a bargain at €340 for an apartment, or €269 for a room in a shared house.

Stuttgart is the second most expensive city for students, with WG rooms costing €485 per month on average, compared to €438 in Freiburg, €425 in Ingolstadt, €410 in Hamburg and €388 in Cologne. (ssk)