International Campus AG expands into The Netherlands
Dear readers,
Now it’s official. The number of new students will remain con-stantly high. The Standing Conference of the Ministers of Educa-tion and Cultural Affairs (KMK) has considerably raised its forecasts for the number of new students. It now assumes – as have many observers for years – that by 2020 around half a mil-lion young people per year will begin university. Fortunately, public student grants (BaföG) will also be raised to contempo-rary levels.
The perception and acceptance of the asset class is growing around the world. The international consultancy group Savills claimed recently: “Student accommodation became a successful and important asset class during the global financial crisis.” Against the backdrop of ongoing low interest rates, investment alternatives which offer reasonable returns have become more popular than ever with institutional investors.
The last few months have also been exciting for International Campus. We have strengthened our team, moved to a new of-fice and ventured into the Dutch market, where there will be a shortage of some 28,000 student apartments by 2020. Together with DUWO, the Dutch market leader for student accommoda-tion, we will see more than 2,200 student apartments complet-ed in the next few years as investor and co-developer. In this IC newsletter, we will take a look at current trends and the residen-tial market in Berlin. We will also introduce our newly estab-lished corporate consultancy firm “Consulting Cum Laude”.
Horst Lieder
CEO of International Campus AG
Student living: current trends
Forecasts adjusted
At the beginning of July 2014, the Standing Conference of the Minis-ters of Education and Cultural Af-fairs (KMK) considerably raised its forecast for the number of new students – a well-overdue correc-tion, according to many observers. The KMK now assumes that some 500,000 young people will begin university in the next few years. The number of students will even reach more 465,000 in 2025. So far several factors have been un-derestimated by officials. For one, the temporary double volume of A‑level students leaving school due to educational reforms will also have an impact in the medi-um term, plus there is also a greater influx from abroad. The number of foreign students at German universities, high schools and technical colleges is expected to rise rapidly to 300,000 by 2020. While student fees in the UK, for example, can amount to up to EUR 18,000 per academic year, Ger-many has the advantage of having no student fees.
Trend towards more education
In 2012 almost 54 per cent of school leavers had higher educa-tion entrance qualifications – in 2003 it was only 39 per cent. Dur-ing this period the percentage of new students rose from almost 40 to more than 61 per cent. Ac-cording to surveys, 77 per cent of A‑level students plan to go to uni-versity after finishing school. Since 2011 the percentage of new stu-dents has constantly been above 50 per cent. But while the number of students has increased by 25 per cent in the last 12 years, the number of rooms in residenc-es has hardly grown by more than 4 per cent.
Demand exceeds small-scale
residential cosnstruction
Whether it is a shared apartment, a place in student accommodation or a single apartment, small-scale residential accommodation is rare, and demand is subsequently high. There continues to be an acute shortage of housing in many me-tropolises and university towns. According to the recent fifth re-port by Allensbach Research Insti-tute and Reemtsma Foundation entitled “Study conditions 2014”, 72 per cent of all new students in Germany experienced “difficulty” or “great difficulty” in finding ap-propriate accommodation. While construction is once again increas-ing in Germany, only very few stu-dents are actually benefiting from this.
Mounting competition
As part of the stronger migration to cities and metropolitan areas, the rising share of people living alone and increasing mobility, mi-cro apartments are becoming a hugely sought-after commodity. Post-graduates, commuters, sin-gles and students are all looking for the same type of small-scale residential accommodation. Ac-cording to the fifth Allensbach re-port, appropriate accommodation is “extremely important” to 27 per cent of students. For 30 per cent of all university students, accom-modation was a factor in deciding where to study. A recent report by the international consultancy company Roland Berger confirmed the trend: by 2025 – over the next eleven years – the number of households in Germany will in-crease by around 2 percent. With some 41 million households, this corresponds to an increase of more than 800,000 households. This is a clear indication that one- and two-room apartments will be particularly sought after in Ger-many.
In focus: Berlin
Student accommodation
Market in the capital
Berlin is very popular among students. A total of 164,728 young people are en-rolled at the city’s four universi-ties, three art schools, seven technical colleges and several dozen private universities. Three of the four universities are elite universities. Around 16 per cent of students are from abroad. Of the students in Berlin who took part in the fifth Allensbach re-port “Study conditions 2014”, 82 per cent experienced “diffi-culties” or “great difficulties” in finding accommodation. There are a total of 9,411 places in student accommodation, which corresponds to an accommoda-tion ratio of 6 per cent. The res-idential vacancy rate in Berlin stands at just around 2 per cent. Rents have accordingly risen: by 36.5 per cent on average from 2008 to 2013. Demand for ac-commodation in the city centre within the S‑Bahn ring is particu-larly high. Of all Berlin house-holds, 54 per cent are single-person households.
“The metropolis is awakening“
The economic forecasts for Ber-lin are also positive. A recent study by PWC ranks Berlin at number 11 of the world’s 30 most important metropolitan areas. More than 200,000 peo-ple work in research, and more than 200,000 work in the arts and creative industry. Growing economic and purchasing pow-er, a high quality of life and ex-cellent infrastructure attract around 50,000 people – most of them young – each year. Around 30 million overnight stays by tourists are expected in 2014.
Three questions for Roman Diehl about Consulting Cum Laude:
Why did International Campus establish “Consulting Cum Laude” (CCL)?
Based on its close proximity to the student target group, Inter-national Campus will vertically diversify its business model with the corporate consulting firm “Consulting Cum Laude”: from student accommodation to con-sulting and market research. It is becoming increasingly evident that students and graduates are a valuable resource for the whole economy, both as cus-tomers and employees. We want to exploit this.
For whom is this consulting platform attractive?
Consulting Cum Laude is not on-ly attractive for the real estate industry. We therefore offer our services to companies of all sec-tors and sizes that want to make themselves ready for the “battle for talent” and seek direct ac-cess to the 17-to-32-year-old customers of today.
What is special about CCL and when does it start?
“Generation Y” thinks different-ly than previous generations, which is obvious considering the digitalisation of (social) life. We have therefore opted for an in-novative consulting approach: based on an extensive knowledge database, experi-enced management consultants work closely with creative stu-dents to develop effective solu-tions, for example in “employer branding”. CCL starts in mid-August. Demand from compa-nies is huge!
News
European mobility programmes to become “Erasmus+”
The European Union is combin-ing its mobility programmes for students and apprentices for all 28 member states under one roof and is increasing the budget considerably. By 2020 the EU expects the exchange pro-gramme to cost EUR 14.8 billion. The programmes Erasmus, Co-menius, Leonardo da Vinci and Jugend in Aktion will become “Erasmus+”.
Record number of German pupils want to take A‑levels
According to the report “Jugend Leben” by the University of Gies-sen, 77 per cent of the 6,000 pu-pils surveyed between the ages of 10 and 18 want to take A‑levels.
Bachelor insufficient
According to the fifth Allensbach report, 61 per cent of students want to earn a Master’s degree after their Bachelor’s degree. Only 27 per cent say a Bachelor’s degree sufficiently prepares them for working life. The lim-ited acceptance of the Bache-lor’s degree and better earnings and career options are the main reasons cited.
Influx to universities remains high
The number of new students will remain high in the coming years, according to new estimates by the Standing Conference of the Ministers of Education and Cul-tural Affairs (KMK). By 2019 it is expected that around 500,000 young people will enrol at uni-versity each year. According to KMK, the number of new stu-dents in 2013 amounted to around 507,000.
Bavaria to increase funding for student apartments
Federal State Bavaria plans to increase funding for the con-struction of student residences. In order to create 1,000 new places in student accommoda-tion, funding has been increased to EUR 27.5 million for 2014 – which corresponds to EUR 27,500 per one apartment.
Stable percentage of new stu-dents
Since 2011 the percentage of new students in Germany has been constantly above 50 per cent. Expenditure on education, research and science now ac-counts for more that EUR 247 billion, or 9.3 per cent, of GDP.
Student housing an internation-ally important asset class
In a recent analysis, global real estate service provider Savills concluded that student accom-modation has become a major asset class at an international level. Global investments in-creased from EUR 2.5 billion in 2007 to around EUR 5.3 billion in 2013. Student accommodation generates reliable rental returns thanks to high and stable de-mand.
EUR 2.7 billion required
According to estimates by the German student services organi-sation (DSW), investment of EUR 2.7 billion is required to create 45,000 additional places in stu-dent accommodation in Germany – just for low-income students.
1‑person households in majority
According the Federal Statistical Office (Destatis), the most com-mon household is the single-person household (2011). A total of 37.2 per cent of all households are occupied by only one person, and this figure climbs to as high as 42 per cent in large cities. Of those living alone, 17.6 per cent are younger than 30 – 34.1 per cent are over 64.
