Student housing in Italy is a profitable business

Student housing in Italy offers a promising investment opportunity / Gtres
Student housing in Italy offers a promising investment opportunity / Gtres
3 January 2018, Redaction

Between now and 2025, an estimated eight million international students will be involved in projects in the OECD area, and Italy is the perfect country to take advantage of this wave of young people to develop new student housing. Jll gives us the lowdown on its latest research project, entitled "Student Housing in Italy”.

Chinese and Indian students arriving in Italy

International movements of students, especially from India and China, is set to become more and more common in the coming years, creating a real need for student accommodation. According to Jll, if in 1990 international students were limited to a threshold of 1.3 million, in 2025 there will be 8 million of them, and this will grow by another 60% until 2027.

The influx of foreign students is increasing year by year in Italian universities: in the last fifteen years, the number of non-Italian students who registered the country has doubled. In all, in the academic year 2016/2017, about 100,000 students from abroad were registered, and you can add to that more than 22,000 students from the Erasmus programme.

At the same time, the number of degree courses offered in English throughout Europe has increased: there were only 55 in 2009, whereas last year they reached 2,900. In Italy in the academic year 2016/2017 they reached 339, and this figure is due to increase in the future.

Italian universities, student residences

This trend of increasing numbers of foreign students is excellent news for Italy, whose universities have long been equipping themselves to offer quality international degrees. Italy has the advantage for students of an affordable cost of living and relatively low university fees compared to the rest of Europe, while still giving excellent quality teaching and value for money.

At the moment, the houses where students live in Italy are mostly owned by their parents (75% of students in Italy live at home with their mum and dad, the highest percentage in Europe). The rest of the student homes are in the hands of private individuals, institutions and various associations, campuses and university halls.

However, the door is also beginning to open to international investors: to date, according to Jll, there are about 50,000 beds available in student residences, compared with a potential demand of over one million students and young workers. The growth and business potential for this student housing sector is more interesting than ever. In Italy, in fact, the ratio between space availability and demand is no more than 3%, while in the United Kingdom it is as high as 34%. In Ireland it’s 15%, in France 11%, in Germany 9% and in the Netherlands and Spain 6%.

University housing in Italy offers great returns for investors

At a global level, the student housing market is considered a mature asset class, but in Italy it’s still limited, with a prevalence of new development projects. In 2017, 6.9 billion investments were recorded at the Europe, Middle East and Africa (EMEA) level (+16% compared to last year), with the United Kingdom playing the lion's share: 83% of this volume is focused on the UK market.

In 2017, students in the UK accounted for 7% of the country's total real estate investment, while in Europe this asset class has an average market share of 3%. In Italy, on the other hand, the sector accounted for only 0.1% of the total, with very interesting net returns: according to Jll, the average rate of return on investment in student housing in Italy ranges from 5.75% to 6.25%.

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