Student Housing: Projects, Noteestimates


StudentHousing: Projects, notestimates!

Dear rea­ders,

For the last few weeks, the Ger­man real estate press has been de- bating whe­ther demand for “high­ly pri­ced” stu­dent accom­mo­da- tion has now been met. Given the gro­wing num­ber of peo­p­le of all ages living alo­ne, the con­stant­ly high num­ber of stu­dents and the incre­asing trend in for­eign stu­dents moving to Ger­ma­ny, we say defi­ni­te­ly not. While an incre­asing per­cen­ta­ge of “com­pact accom- moda­ti­on” is being con­s­truc­ted, this trend has not been under way for that long.

Dri­ven by the huge demand for sin­gle per­son house­holds in all pri­ce seg­ments, the need for stu­dent accom­mo­da­ti­on in Germany´s met- ropo­li­tan cities and uni­ver­si­ty towns with a gro­wing popu­la­ti­on in all pri­ce seg­ments will not be cover­ed for years. Of cour­se, all this has ral­lied num­e­rous inves­tors – but no one can say for sure just how many of the announ­ced pro­jects will actual­ly be rea­li­sed. In order to achie­ve long-term suc­cess and reasonable returns, it is es- sen­ti­al to have a clear busi­ness model, in-depth know­ledge of the “stu­dent” tar­get group and an effec­ti­ve ope­ra­ting con­cept.

We want to point out two things: Inter­na­tio­nal Cam­pus will be rep- resen­ted at the EXPO REAL – at a joint exhi­bi­ti­on stand with the City of Munich. Our con­sul­tancy sub­si­dia­ry, Con­sul­ting Cum Lau­de, will also be con­duc­ting a high­ly topi­cal sur­vey on the cur­rent lack of young talent in the Ger­man real estate indus­try tog­e­ther with branch maga­zi­ne “Immo­bi­li­en­wirt­schaft”. You are very wel­co­me to par­ti­ci­pa­te via this link!

I hope you enjoy the news­let­ter,

Horst Lie­der

CEO Inter­na­tio­nal Cam­pus AG

Ger­man resi­den­ti­al real estate with a total return of 8.1 per­cent per year 

Total return, – the increase in value plus rents – for apart-ments in the 127 lar­gest A and B cities in Ger­ma­ny, increased by an avera­ge of 8.1 per­cent per year bet­ween 1992 and 2014. This means that total return out­per­for­med fixed-inte­rest bonds (REX / 6.3 per­cent) and inter­na­tio­nal stocks (MSCI / 6.9 per­cent). The avera­ge ren­tal return sin­ce 1999 has been around 3 per­cent hig­her than Ger­man govern­ment bond yields. This is accor­ding to a re-port in WELT AM SONNTAG based on data from the ECB Euro­pean Cen­tral Bank, RIWIS, MSCI and Deut­sche Bank. 

Stu­dent Housing as a part of the asset class resi­den­ti­al 

Rents for “com­pact” or “small-sca­le” apart­ments with one or two rooms have risen much more shar­ply than stu­dents’ in-come. Stu­dents as well as young pro­fes­sio­nals and trai­nees are incre­asing­ly being squeezed out of the pri­va­te ren­tal mar­ket. For this reason, in Ger­ma­ny the stu-dent housing mar­ket seg­ment has also beco­me an invest­ment niche within the real estate resi-den­ti­al asset class in the last few years. Thanks to attrac­ti­ve re-turns which are rela­tively non-cycli­cal and some­what hig­her than tra­di­tio­nal real estate re-turns, Stu­dent Housing has be-come a par­ti­cu­lar­ly appe­al­ing addi­ti­on to port­fo­li­os for insti­tu-tio­nal and semi-pro­fes­sio­nal in-ves­tors. 

Ger­ma­ny: No. 1 invest-ment desti­na­ti­on in Euro­pe 

During the Euro­pean Stu­dent Accom­mo­da­ti­on Con­fe­rence in Lon­don in May 2015 with more than 500 experts and par­ti­ci-pants, when asked “In which coun­try would you invest at the moment?”, around 50 per­cent of tho­se sur­vey­ed repli­ed: in Ger-many. As a result, Ger­ma­ny has beco­me the pri­ma­ry invest­ment loca­ti­on for inter­na­tio­nal inves-tors in stu­dent accom­mo­da­ti­on within Euro­pe – well ahead of the Net­her­lands and Spain. 

Mar­ket deve­lo­p­ment 

Stu­dent Housing 

Stu­dent Housing is beco­ming in-cre­asing­ly important as an in-ves­t­ment class, alt­hough only esti­ma­tes are available as to the actu­al num­ber of pro­jects and stu­dent resi­den­ces under con-struc­tion in Ger­ma­ny. Many re-gio­nal pro­ject deve­lo­pers want to address the issue and deve­lop small-unit housing pro­ducts, but not all mar­ket par­ti­ci­pan­ts are able to rea­li­se “com­pact” or “small-sca­le” accom­mo­da­ti­on. Many of the housing pro­jects fail due to lack of finan­cing becau­se of insuf­fi­ci­ent know­ledge of the tar­get group “stu­dent” and the absence of effec­ti­ve ope­ra­ting con­cepts and plat­forms. Buil­ding “small” is not enough. Stu­dent housing does not work in all pri­ce seg­ments or in all cities; the city of Frank­furt an der Oder in Eas­tern Ger­ma­ny is not the vibrant city of Frank­furt am Main. What per­ple­xes many mar­ket obser­vers is that the­re is no clear distinc­tion bet­ween pro­ducts and tar­get groups in com­pact housing. We want to explain three con­cepts. 

For busi­ness peo­p­le: “Ser­viced apart­ments” 

The “ser­viced apart­ment” con-cept, or “short-term accom­mo­da-tion”, is deri­ved from the hotel busi­ness. Bes­i­des fur­nis­hed one and two-room apart­ments in cen-tral loca­ti­ons with living space of bet­ween 25 to 35 squa­re met­res, ser­vices simi­lar to tho­se pro­vi­ded by hotels can be had for an extra cost: from laun­dry ser­vice to con-cert tickets. The pri­ma­ry tar­get group is busi­ness peo­p­le and pro-ject workers. 

Micro Living 

Micro apart­ments are small apart­ments with one to two rooms. They are eit­her (part­ly) fur­nis­hed or come wit­hout fur-nitu­re. Com­pared to stu­dent housing apart­ments, micro apart­ments are big­ger on aver-age and (gene­ral­ly) do not offer use of com­mu­nal are­as. The tar-get groups for micro apart­ments are young pro­fes­sio­nals, com-mut­ers or PhD stu­dents, for ex-amp­le – all peo­p­le who work and have their own inco­me and a lon­ger ten­an­cy. 

For stu­dents: “Stu­dent Housing” 

On the other hand, today’s stu-dent accom­mo­da­ti­on includes com­mu­nal are­as such as semi-nar rooms, coo­king area, loun­ges etc. and is geared towards stu-dents, i.e. young peo­p­le aged 17 and over from various cul­tu­ral back­grounds. This is why aspects like com­mu­ni­ty buil­ding and secu-rity are espe­ci­al­ly important when it comes to the Stu­dent Housing seg­ment. Stu­dent apart­ments are gene­ral­ly bet­ween 14 and 24 squa­re met­res and – depen­ding on pro­vi­der and qua­li­ty stan­dards – a bath­room and kit­chenet­te.

Three ques­ti­ons for Alex­an­der Gulya about THE FIZZ archi­tec­tu­re: 

How should a stu­dent accom­mo­da­ti­on be con-struc­ted? 

One the one hand, it must meet today´s needs of the resi­dents, be inte­gra­ted into its imme­dia­te envi­ron­ment and have a time-less design. On the other hand, it should be high­ly func­tion­al: with a cashl­ess laun­dry room, a self-expl­ana­to­ry signage sys­tem and include dura­ble fur­ni­tu­re with scope for an indi­vi­du­al lay-out that makes you imme­dia­te­ly feel at home. 

How can returns be achie­ved sus­tain­ab­ly? 

Par­ti­cu­lar atten­ti­on should be paid to ongo­ing ope­ra­ting cos­ts, espe­ci­al­ly when it comes to all-in-rents. For exam­p­le, we en-sure that cir­cu­la­ti­on space is op-timal­ly uti­li­sed, and the­r­e­fo­re only use win­dows which can­not be til­ted and ener­gy-effi­ci­ent LED lights. Our high KfW 70 and KfW 55 stan­dards keep ener­gy cos­ts mini­mal. 

What makes THE FIZZ 

housing so spe­cial? 

All THE FIZZ accom­mo­da­ti­on lives up to our qua­li­ty stan­dards and reflects our brand values. Our first-class archi­tec­tu­re and con­sis­tent high qua­li­ty stand-ards set us apart from the com-peti­ti­on. The hearts of our THE FIZZ resi­den­ces are the com­mu­nal are­as with a cen­tral recep­ti­on with house mana­ger ser­vice, semi­nar room, coo­king area and loun­ges. 


Inter­na­tio­nal Cam­pus AG at the EXPO REAL 2015 

Inter­na­tio­nal Cam­pus AG will be repre­sen­ted at the EXPO REAL 2015 at joint exhi­bi-tion stand no. A1.320 within the city of Munich. 

Exten­si­ve sur­vey on lack of young talent 

Con­sul­ting Cum Lau­de, the con-sul­ting sub­si­dia­ry of Inter­na­ti­on-al Cam­pus AG and spe­cia­list for employ­er bran­ding and talent recrui­ting, are con­duc­ting a sur-vey on the lack of young talent of the so cal­led “Gene­ra­ti­on Y” in the Ger­man real estate sec­tor tog­e­ther with sec­tor maga­zi­ne Immo­bi­li­en­wirt­schaft. The re-sults of the exten­si­ve sur­vey will be published exclu­si­ve­ly in the Novem­ber edi­ti­on of Immo-bili­en­wirt­schaft. 

Ham­burg remains young 

Accor­ding to a Ber­tels­mann Stif­tung report, the fede­ral sta­tes of Ber­lin and Ham­burg will have the youn­gest popu­la-tion in Ger­ma­ny by 2030 – with an avera­ge age of 43 at the me-dian. 

620,000 new stu­dents 

In its edu­ca­ti­on report “Bild-ungs­re­port 2020“, the Stif­ter-ver­band für die Deut­sche Wirt­schaft fore­casts that the­re will be around 620,000 new stu-dents in 2025. While the num­ber of Ger­man stu­dents is decli­ning, the num­ber of for­eign stu­dents is rising shar­ply. 

Gross added value 292 mil­li­on euros 

Accor­ding to cal­cu­la­ti­ons by the Ger­man Aca­de­mic Exch­an­ge Ser­vice (DAAD), for­eign stu­dents gene­ra­te gross added value of 292 mil­li­on euros each year and more than 3,100 new jobs. Pub-lic spen­ding on edu­ca­ti­on would be total­ly cover­ed if just 2 per-cent of the­se stu­dents start working in Ger­ma­ny after they gra­dua­te. 

Gro­wing need for housing 

Accor­ding to the BBSR, the popu­la­ti­on in Ger­ma­ny will de-cli­ne to 78.2 mil­li­on in 2035 (2012: 80.5 mil­li­on). Howe­ver, the num­ber of house­holds will increase by 2 per­cent.

IC Net­her­lands starts con-struc­tion in Ams­ter­dam 

IC Net­her­lands B.V., a sub­si­dia­ry of Inter­na­tio­nal Cam­pus AG, star­ted the con­s­truc­tion of a stu-dent resi­dence in Ams­ter­dam-Zeebur­ge­rei­land in June. DUWO, the lar­gest ope­ra­tor in the Neth-erlands, will run the stu­dent ac-com­mo­da­ti­on as the gene­ral ten­ant. Zeebur­ge­rei­land is the first of five pro­jects of the Am-ster­dam port­fo­lio of IC Nether-lands B.V. 

Best stu­dent cities: Ber­lin ranks third in the world 

In the “Best Stu­dent Cities 2015” ran­king by QS Top Uni­ver­si­ties, Ber­lin came in third place in the cate­go­ry “afforda­bili­ty” after Tai-pei and Mexi­co City. Munich came fifth. 

350,000 for­eign stu­dents in Ger­ma­ny 

The num­ber of for­eign stu­dents excee­ded 300,000 for the first time in 2014. The objec­ti­ve of the Ger­man govern­ment and the fede­ral sta­tes is to attract around 350,000 for­eign stu­dents to Ger-many by 2020. Chi­na and India will play an incre­asing­ly im-portant role in this regard. 

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