Cost of student housing soars

by

Markets

The cost of student housing has soared in Germany, thereby putting a real dampner on the market, according to a recent study by Potsdam-based Moses Mendelssohn Institut (MMI) on behalf of developer GBI.

Since the start of the semester this year, the situation has worsened, according to the study, with the situation being particularly bad in Munich.

The study analyzed 93 university towns with more than 5,000 students to create a ‘tension’ index with a maximum value of 100. For the fifth time since the start of the yearly study, the country-wide average increased by 0.7 points to 37.7 points.

However, the country-wide average belies the real story: namely, that in expensive cities such as Munich, affordable student housing is nigh on impossible to find. As a result, Munich topped the list of unaffordable cities, scoring 78 points. It is followed closely by Hamburg on 76 points, a rise of 10 points since 2013. Other cities, such as Tübingen, Nürnberg, Leipzig, Rostock, Kassel, Fulda, Oldenburg and Essen tell a similar story.

Nonetheless, some cities have actually become more affordable in recent years, including Frankfurt, Cologne and Heidelberg, although it’s too early to say if this trend will continue, according to Stefan Brauckmann, director of the MMI.

MMI’s study analyzed 23 factors, including the price of a room in a shared house (WG), the price development of study and first semester costs and the attractiveness of the university to both domestic and international students.

Unsurprisingly, the cost of living varies enormously from city to city. A room in a shared house in Munich typically costs around €570 a month, compared to a national average of €353. Cottbus offers the cheapest student housing, at just €208 per month, or just under a third what students are paying in Munich. Prices for unfurnished rooms typically cost €345 a month in 2016, a jump of 23% since 2012, according to Empirica.

And as rents soar, investors are clamouring for a slice of the pie. Student housing deals are expected to break through the €1b barrier for the first time this year, up from €750m last year, according to Savills’ report ‘Spotlight: Student housing Germany’, published this summer. The rapid growth in Germany’s student housing sector means that more and more deals are being transacted, according to Matti Schenk, a senior consultant in research at Savills in Berlin. There have been around €510m in deals this year up until mid-September, according to Schenk.

Some new student housing developments are on the cards. Last week (20 September) student housing specialist International Campus broke ground on The Fizz Frankfurt Sommerhoff. The 332 apartments in Frankfurt’s Gutleutviertel, which are designed to appeal to both students and young professionals, are due to open in time for the winter semester in 2019. International Campus is investing around €50m in the project.

‘We can now dig in,’ said Horst Lieder, CEO of International Campus. ‘Following our successfully established ‘THE FIZZ Frankfurt Gallus’ on Mainzer Landstraße 323, we can now get to work on ‘THE FIZZ Frankfurt Sommerhoff’, our second project in the financial capital.’

The scheme's ten to eleven above ground floors will comprise residential accommodation and service amenities totalling around 17,150 sqm. International Campus also announced in September that its first Austrian scheme, The Fizz Vienna, is scheduled to open in October, providing 632 apartments.

Over in Bochum, new student housing is also being developed by London-based developer BaseCamp Group. The 60 metre high student housing tower will comprise around 400 apartments close to Bochum’s Hbf. The housing, which can also be used by tourists, will be added to the European Student Housing Fund, in which Triton Europe Investments is involved and which also includes the ‘BaseCamp’ project in Dortmund announced back in March. Similar projects are also underway in Berlin, Potsdam and Leipzig.

Top 10 in MMI ‘tension’ index

Munich 78 points

Hamburg 76

Stuttgart 74

Köln 71

Frankfurt am Main 70.5

Freiburg im Breisgau 66.5

Tübingen; Rottenburg 65.5

Darmstadt 65.5

Berlin 63

Konstanz 61