Good reasons for an investment in student housing
Student housing is a market segment with a good future
No more than 314,000 places in student residences are available to 2.7 million students in Germany. The Bologna Process and a growing number of foreign students are fueling the level of demand for rooms in student residences. The Deutsche Studentenwerk has called for 45,000 additional residential units to be provided by 2017.
Demand is particularly acute for high-quality yet affordable accommodation. The existing range available in particular comprises low-standard residential homes. This gap can be closed by private real estate specialists, opening up an attractive opportunity for institutional and private investors to take a stake in infrastructure and education alike.
DREF is a leading specialist for student housing in Germany
DREF – Deutsche Real Estate Funds™ has dedicated its attention to German student housing and micro living in the past ten years. With creating and selling TWENTY FIRST Student Living, one of Germany`s biggest student housing platforms and portfolios of all time, DREF – Deutsche Real Estate Funds™ gained a fundamental and unique expertise in this specific real estate asset class. DREF – Deutsche Real Estate Funds™ was responsible for the development, financing, modernisation and management of the TWENTY FIRST student housing portfolio with some 2,500 student residential units, in 12 German university cities, valued in total at around 170 million euros. Q3 2017 the portfolio was sold to one of the former minority share holders.
Student residences are selected according to stringent investment criteria
In order to ensure a worthwhile investment, the student residences need to appreciate in value in the coming years. For this reason, their selection is subject to strict criteria: in addition to the residential home itself, its central location and the number of full-time students in a given city play an important part. Therefore, we only invest in university cities with at least 10,000 full-time students and 150,000 inhabitants. The distance from the property to the university must not be more than three kilometers. Moreover,DREF – Deutsche Real Estate Funds™ primarily purchases existing and established residential properties with at least 100 apartments. In addition to existing student residences, apartment complexes, apartment hotels as well as three- or four-star hotels are potential properties.
Standardised processes in management and modernisation enhance level of rental income and value of the properties
The refurbishment of the student residences purchased and the optimization of their management enhance the rental income and the valuation of the relevant properties. These measures are scheduled in line with a standardised process with established partners and generally take three to twelve months to complete. During this time, the floor-by-floor modernisation ensures a constant cash flow. This serves to lower costs, boost efficiency and reduce the risk involved.