Partner excursion to Barcelona

On 19 and 20 June, The Class of 2020 organized its second annual off-site excursion. This year, representatives of our partners travelled to Barcelona. Aimed at learning about developments in the student accommodation and higher education communities, to get to know each other better, and to attend the first Class of 2020 partner strategy meeting.

 Schermafbeelding 2014-07-18 om 13.28.47

 

 

 

Our partner Melon District was our host, and together with colleagues from RESA they organized a program that was inspirational, informative and fun. We toured Melon District’s Marina property – with roof top swimming pools they represent the luxury segment of the Student Accommodation community. RESA gave us a tour of Pere Felipe Monlau, their oldest Barcelona property that was opened in 1997 and is currently in the process of being renewed.

At the Universities Department Headquarters of the Generalitat de Catalunya we learned about the Catalonian university system and how it is working together with the private sector (also in accommodation) to market the region as a destination for students.

To capture the great atmosphere, Melon District created the video below. On behalf of all Class of 2020 partners we would like to thank Melon District and Resa for organizing an amazing two days in one of Europe’s great cities.

 

As the UK student housing market graduates, Europe is just starting school

An impression of LD Property’s Student Housing Event by Wouter Onclin, Research and Programme Manager at The Class of 2020

 

The UK student housing market is often described as mature. When Philip Hillman (JLL) asked panellist at what age in the life cycle they think the market actually is, consensus was that it is somewhere in its 20’s or early 30’s. Mature, but with potential to develop, learn and grow. Mainland Europe’s student accommodation market on the other hand remains a largely untapped land of opportunity, blurred by a myriad of politics, regulations and differences in student culture. If there is one thing that all markets have in common: in order to build the right kind of accommodation, you have to know your customer. As Nick Riley of WCEC architects put it: “You can’t play poker around a breakfast bar”.

Welcome to LD Property’s annual Student Housing event, where over 300 professionals in student accommodation met on Thursday. The event showed the increasing level of sophistication in the UK market. From the traditional university owned halls to the swanky high-spec towers that Nido builds – for which they won the Resi award for best student housing operator on Wednesday. And even the market of shared houses (HMO’s or off-street housing) is consolidating, becoming more professional and service oriented. There really is a student bed for everyone.

A £2bn per year sector
The story of student accommodation in the UK is one of tremendous growth in the past years. The product appeared more resilient in turbulent economic times, and even major policy decisions like the overhaul in the UK academic funding structure (students now pay £9,000 in tuition per year) has hardly impacted the overall sector performance. This has attracted the interest of investors worldwide, seeking to invest in student accommodation. The total investment volume in the UK alone exceeded £2bn in the past two years, and is expected to do the same in 2014. The sector is reporting strong yields and bookings for the coming academic year are ahead of last year’s bookings at this time.

Student accommodation is now firmly on investors’ minds. A survey by JLL showed that over 70% of interviewed investors planned to increase its exposure in student accommodation.

Holistic student experience
The market has become more professional and more specialised. James Pullan (Knight Frank) specifically pointed out a move from development to investment and a rise in third party operators of student properties, making the operation costs immediately transparent. Universities are changing as well, focusing more on the student experience in a holistic way, and finding the right accommodation partners to fit their students’ needs. Catherine Anderson of the University of Liverpool commented on the different ways in which she partners with accommodation providers. From nomination agreements to recommendations to a regular phone call. Partnerships come in many forms.

Growth is not universal
But while the fundamentals of the market remain very strong, there are some challenges on the horizon. The general growth in domestic and international student numbers does not mean universal growth. Some universities are more successful in attracting students than others, presenting a risk to accommodation operators relying on these less successful universities. The patterns of international students are changing as well. In 2012/2013 the number of international students in the UK dropped for the first time in 29 years, with applications from India down 26%. It shows the sector’s exposure to policy decisions regarding immigration and tuition.

London becoming too expensive
Another challenge for the UK market is the limited availability of good sites and competition with other types of development. The current success of the residential market often means that local councils prefer residential development over student housing development. This problem is especially apparent in London, where only two boroughs are currently accepting planning applications for student housing development. The pipeline is drying up quickly, dropping from 5,259 units delivered in 2012, to 3,728 in 2014 to a current projected pipeline of only 417 units to be delivered in 2016. Numbers that are all below the growth of student numbers for the city. For London this will mean increasing issues with affordability and might affect the performance of London as a study destination.

Europe: the next frontier?
An increasing investment appetite in student accommodation and an increasingly competitive domestic market for the UK – does this mean that investments are also flowing into other European markets? Well, not quite yet, according to Marcus Roberts (Savills): “Investments in Western European student housing markets are still only a fraction of those in the UK, despite the market being many times bigger”. The opportunities in the European market are there, with international student numbers set to double in the next ten years, the number of English language courses exploding, and the education sector quickly harmonising under the Bologna treaty. But the challenges in the market remain, especially with regards to planning, politics, regulations and variations in student culture.

A build up does seem to be taking place. The Class of 2020, a platform for student housing professionals across Europe, is seeing increasing interest. Crosslane, its latest member, has announced plans for 15,000 student beds across Europe in the next five years. Bouwfonds, another member, has recently announced several acquisitions throughout Europe. Many other European parties from France, Austria, Germany and The Netherlands were present at the conference; all set to learn from the experience the UK has to offer.

So as the UK student housing market is graduating, the European market is just starting school.

UNITE and Crosslane join The Class of 2020

The Class of 2020 is proud to announce two new partners: UNITE Students and Crosslane. With these new partners, The Class adds experience, knowledge and ambition to its growing platform.

UNITE Students is the UK’s leading manager and developer of student accommodation, providing a home for 41,000 students in over 120 purpose built properties across 23 of the UK’s strongest university towns and cities. UNITE has nearly 1,000 employees and works in partnershop with over 50 higher education providers, as well as renting rooms directly to students. In May 2013 UNITE Students was awarded the Student Accommodation Provider of the Year at Property Week’s RESI Awards.
Richard Smith, Managing Director of Operations for UNITE Students said: “We look forward to working with The Class of 2020 and their partners in order to learn from them and share our knowledge and expertise in the sector.”
Continue reading about our partnership with UNITE…

Crosslane are a U.K investment and development company who specialise in the student housing sector. Under its Prime Student Living brand Crosslane currently operates a portfolio of 1,500 beds in the UK and a further 500 beds in Germany. The company has a planned future development pipeline of over 1,500 bed spaces to be acquired and developed during the next 2 years, and aims to grow to 15,000 beds in the next 5 years. Andrew Jamieson, Director of Acquisitions & Development – Continental Europe, said: “We expect our partnership with The Class of 2020 to help us establish connections in the sector that will aid our business growth objectives. We also see this partnership as an opportunity to play a significant role in shaping the future of student housing across Europe.”
Continue reading about our partnership with Crosslane…

unite-logo  Crosslane logo artwork #61E

COLUMN: Student Housing and its Untapped Potential

Photo Samuel VetrakBy Samuel Vetrak, CEO StudentMarketing

There are more than 6 million international students studying abroad, be it in higher, secondary or language education.

Unlike domestic students, a majority of international students come from well situated families and are housed in student residences, which increases the demand for this type of accomodation in major education hubs and cities.

Add another factor to this phenomenon – the number of international students is projected to almost double by the year 2020. This is a booming demand that actually proved to be resilient to the economic downturn back in 2009.

No wonder we have noticed a never-before-seen movement of capital in recent years. The caliber and speed of this movement is similar to the gold rush era.

However, this comes as no surprise. Student housing was, but is no longer, a hidden gem. The numbers were put on it, future growth was calculated, risk was measured, and the sector was labeled, which caused it to become a viable investment sector.

In fact, international students spend 20% and more of a total of $72bn pa on housing – a number that is expected to double by 2020. This is a sector where demand will surpass supply by a large amount in coming years.

HE - Market Outlook

The Class of 2020 and StudentMarketing announce partnership to help University Cities

The Class of 2020, Europe’s largest student housing platform, and StudentMarketing, the leading youth travel and education experts, signed a partnership agreement during ITB Berlin.

The announcement heralds the highly successful collaboration, on projects such as the report‘Will Amsterdam be Europe’s Next University Capital?’. The report compared Amsterdam’s internationalization level of student populations to that of other university cities in The Netherlands and Europe. The results and recommendations generated headlines in the press and debate in the city council.

Cities have opportunities to capture a growing number of international students (4.1 million) and benefit from the economic and social impact they bring – an average 10 million Euro and 290 jobs created per 1,000 students per annum.

As Frank Uffen, co-founder of The Class of 2020 explained “Combining our expertise in research, marketing and leadership will enable us to deliver much needed insights and strategy support for university cities looking to improve their ability to compete for global talent.”

Samuel Vetrak, CEO of StudentMarketing, added “As leading youth travel and international education authorities, we are excited about the opportunities we can generate for cities around Europe and beyond. The number of international students will almost double by 2020. Our previous report and research have shown how important it is to act fast and decisively.”

Agreement signed at ITB Berlin
Most appropriately, the signing of the agreement took place in the Youth Travel Center at ITB Berlin following a panel discussion on “How your destination can benefit from the $200bn international youth travel market.” The panel explored why international youth and education travel is increasingly important to countries, states, provinces, regions, and cities. Building on the underestimated ability to raise revenue and traffic, the panel discussed how regional partners can yield long term benefits by capturing future leisure and business travelers in their formative years. Samuel Vetrak, together with a panel of leading destination experts, shared what is new in youth travel and how to best tap into it.

Frank and Samuel signing the agreement

The Class of 2020 makes headlines in The Netherlands

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The Class of 2020 is making the headlines in leading Dutch newspapers as it released a report with 10 recommendations for the city of Amsterdam. Research shows that Amsterdam is underperforming as an international student city. The report contains the 2013 conference conclusions and is titled “Will Amsterdam be the next University Capital of Europe?”

Research and conference recommendations
Deputy mayor Carolien Gehrels called upon The Class of 2020 conference to make recommendations to the city of Amsterdam after it became clear that the city is underperforming as an international student city. Research by StudentMarketing has since shown that Amsterdam is indeed lagging far behind other European capitals with 6,6% international students. The report contains the 10 recommendations that were made by the 2013 conference, and shows the opportunities of Amsterdam as a university capital.

Headlines and politics
Amsterdam’s underperformance as an international student hub comes as a surprise to many, which is shown in the headlines of newspapers De Telegraaf, FD, Het Parool.

The report has been put on Amsterdam’s city council agenda, just two weeks prior to council elections. It calls upon the city to work with education and business leadership to create a more favorable climate for international academia. This includes welcoming investment for student housing development.

Download the report here (PDF in Dutch with English summary).

Map: International students in major European cities (2013 numbers, 2020 projections, and 2020 projected percentages):brochure_map

Cities and developers announce new projects: International investors develop European markets despite regulatory challenges

The Class of 2020 and ULI Netherlands joined forces at the ULI conference in Paris on February 5. The first Student Housing Investment Breakfast was hosted and moderated by ULI Netherlands chairman Rudy Stroink and included investors and operators from across Europe as well as representatives from the Amsterdam investment office. All signs confirm that the market is dynamic: new projects are popping up throughout Europe, but the lack of market data and the patchwork of regulations still makes entering the markets in Europe a challenge.

Strong market fundamentals
Attendants shared their experience in investing in, developing and operating student housing in the UK, Germany, France and The Netherlands. The market fundamentals are strong:

  • An undersupplied market that is not able to keep up with growing demand;
  • Growing student numbers, especially students coming from abroad who rely exclusively on purpose-built student housing;
  • Increasing wealth among international students whose high expectations are not met in traditional student residences;
  • Changing education cultures, where accommodation is increasingly part of the whole experience.

New projects announced
These strong fundamentals were illustrated by the City of Amsterdam which is seeing increased interest from international investors. Bouwfonds, MPC Capital, Alternative Development, and The Student Hotel all expect to announce new projects in the next few months, specifically in the German, French and Dutch markets. Alternative Development shared its experiences developing and operating in the London market, which seems to stand out as the most sophisticated in Europe.

Despite all this good news there are still obstacles in different European markets. Especially when it comes to securing funding and developing locations:

Benchmarks lacking
Whether it is equity or debt funding, investors need reliable market data in order to make their decisions. In the UK the market has matured: comparable data sets are available and exit strategies in place, securing investors’ trust. In continental Europe the market has yet to prove itself. There is a real need for a European benchmark for Student Housing. The Class of 2020 is working with IPD to have one in place by the end of the year.

Regulatory patchwork limits capital flow
Europe is a patchwork of different rent, building and tax regulations. In Hamburg a hotel development has stricter building codes than a residential development, while it is the other way around in Amsterdam. In Sweden the minimum size of a unit is 20 m2′s, while developers wish to build smaller units with more common space. In France, investing in individual units is attractive due to a fiscal tax deduction scheme. In many cases the local government has no experience accommodating private student housing developers.

All the different regulations  limit the flow of capital into the markets and hinder innovative business models in markets that need them. It is difficult for developers to create an international portfolio of projects, as each local market requires customization and attention. Because of these specific local factors, a European business model is difficult to establish. The underlying investors have become European, but regulations are local.

Build a professional network 
Each student housing provider in Europe is pioneering in its own market and inventing the wheel. Sharing best practices and building networks will be essential for the growth and the professionalization of the market as a whole. In this stage of the market it is more important to be smart as a sector than it is to out-smart your competitors.

Market segmentation
The panel also discussed segmentation in the market. Upscale concepts are attractive because of high margins and yields, but in many markets the greatest need is for housing schemes with moderate rents and higher volumes.

Participants:

  • Andrew Dawson (Alternative Development)
  • Leo  Hertog (APG Asset Management)
  • Xavier Jongen (BouwfondsInvestment Management)
  • Caleb Mercer (Heitman)
  • Rainer Nonnengässer (MPC Capital)
  • Wouter Onclin (The Class of 2020)
  • Lars Rompelberg (FAKTON)
  • Rudy Stroink (ULI Netherlands)
  • Eric Thelen (Investment Office, City of Amsterdam)
  • René Tim (Savills)
  • Frank Uffen (The Student Hotel, The Class of 2020)
  • Samuel Vetrak (Student Marketing)
  • Bob van der Zande (Investment Office, City of Amsterdam)

2013 Conference a success!

Over 250 participant from around the globe gathered in Amsterdam on November 13 to discuss about the future of student housing in Europe. It was an inspiring and exciting day. We would like to thank all our speakers, partners and attendees for making The Class of 2020 conference edition 2013 into a great success!

Have a look at the image gallery of the conference day, or watch the 2013 video reports.

Click here to view the attendees list of The Class of 2020 conference 2013.

For the presentations of our 2013 speakers click here.

Read the Class of 2020 magazine below, or find it on issuu.

Mark your calendar for next year: on 11-12 November we will be hosting the 2014 edition of The Class of 2020!