© Kitty - Fotolia.com
Studenten Wohnen
DREF is investing €25m in buying and refurbishing the 1,000 units across four residences in Berlin, Halle, Ludwigsburg and Siegen.
Deutsche Real Estate Funds (DREF) now claims to be the leading provider of student accomodation in Germany after buying a further almost 1,000 student residential units, bringing its total units under management to 3,000 units. A further 700 units are under contract and expected to close in the coming months.
DREF is investing €25m in buying and refurbishing the 1,000 units across four residences in Berlin, Halle, Ludwigsburg and Siegen. This brings its investment to €135m in student residences in Germany since June of this year. Last year the entire student accomodation market saw transaction volume of just over €230m.
The company, whose shareholders include Internos Global Investors and the Somerson Group, financed part of this through a senior secured mortgage-backed bond, originally for €44m in June and then increased to €77m in November, paying a coupon of 4.675% annually. A new bond issue is planned for the first half of 2016.
DREF is now heavily branding its portfolio as 'TWENTY FIRST student living', which offers a full range of services online related to finding accomodation and associated formalities, initially in the group's six student residences in Berlin, Kiel, Bremen and Stuttgart. By March 2016, over 3,000 units are expected to be available for booking. The branding will also be extended to existing properties that have been refurbished.
Meanwhile, British property investor and funds manager Crosslane is also beefing up its presence in Germany with the opening of a Berlin office and the appointment of Jane Woodlock to head up its German business.
Woodlock said, "From our point of view, Germany is the most interesting market for student accomodation in Europe. The steady stream of foreign students is further adding to the demand for accomodation."
The key drivers for the new attraction of Germany as a location for third-level study are, among others, student mobility. The number of foreign students in Germany this year is at a record 301,350 – representing one in every nine students in Germany. OECD forecasts expet the number of students studying outside their home country to be between 3.7m and 6.4m by 2025.
The share of Asian students worldwide now totals 37%, with India showing particularly strong growth to become the third largest emerging market, after China and Russia. The growing middle class in the biggest emerging markets is already being strongly felt in German university applications.
The German government has recognised the need to fight for the best talent internationally and has established its "Excellence Initiative" to lure foreign students and to fight labour shortages in key areas. The government plans include subsidies for new forms of stuedent accomodation.
In contrast to countries such as the UK or the USA, Germany has not been able to offer accessible accomodation to foreign students, with the result that less than 10% of these students live in student-designated housing. Rising numbers of home-grown German students, strong interest in studying from asylum-seekers and refugees, and more visiting foreign students is driving up demand.
Crosslane has also identified other global trends which Germany will need to adapt to in developing the student housing sector. From an investor point of view, these include closer attention to the needs of students and parents, to provide flexible accomodation (with factors such as location, campus spirit, safety, and affordability) at a satisfactory price point.
Crosslane said recently its goal is to provide 10,000 student beds in Germany by 2020, focusing initially on the big cities of Berlin, Hamburg, Cologne and Frankfurt, as well as smaller cities with big university reputations such as Heidelberg, Münster, Bonn and Darmstadt, which are also highly attractive for foreign students.
