While more than 400,000 out-of-town students are preparing for the new academic year in big Italian cities (according to data from Miur from 2016/2017), the impact of this onslaught on property prices is becoming clear, especially in neighbourhoods near universities.
This big rise comes mainly from those who buy an apartment for their child studying in the city and those who want to invest, cashing in on the influx of student as potential tenants and a good future income. Let's take a closer look at the issue with the analysis conducted by Abitare Co.
"Neighbourhoods affected by the presence of universities have always attracted a large part of their demand from buyers of real estate, either for direct use or as an investment," explains Alessandro Ghisolfi, Head of Research at Abitare Co. "Sales and rentals in these places, therefore, have remained better than other areas in what is particularly difficult time for much of the real estate the market. Currently good news for the residential market in general is that there are particularly positive trends in these districts both in terms of demand and price.”
According to Abitare Co's analysis, in general terms during the first half of 2018, the demand for buying a home close to university districts increased more substantially (+5.2% compared with 2017) in comparison with that recorded in other areas (+4.6%).
At the same time, comparing September 2018 with the same period last year, the average sale price of a used house in good condition has grown by 2.2% (2,400 euro per square metre or 223 euro per square foot). This contrasts with +1.3% in non-student areas, with a wide range of variable prices from 1,400 euro/m2 or 130 euro/sq ft in Ferrara to a maximum value of 5,100 euro/m2 or 474 euro/sq ft in Rome in the district of Nomentano near Sapienza. The demand housing in the rental market near university areas has also increased: +4.3%, compared to +3.7% in other areas.
How much does it cost to buy a used house (in good condition) near the main universities?
Considering only the university district of metropolitan cities, in September 2018 the most expensive place is Rome, with an average price of 4,100 euro/m2 or 380 euro/sq ft (+1.8% compared with 2017).
Tor Vergata is the cheapest Roman district (2,800 euro/m2 or 260 euro/sq ft), while prices increase sharply in the areas of Nomentano (5,100 euro/m2 or 474 euro/sq ft), Flaminio (4,800 euro/m2 or 446 euro/sq ft), San Lorenzo (4,200 euro/m2 or 390 euro/sq ft) and Garbatella (3,800 euro/m2 or 353 euro/sq ft).
Just behind Rome comes Milan, where the average price in these areas is 3,700 euro per square metre or 344 euro per square foot (+2.2%), with prices ranging from 2,200 euro/m2 or 204 euro/sq ft in Bovisa to 6,700 euro/m2 or 622 euro/sq ft in the center of Sant'Ambrogio. You’d need 3,300 euro/m2 or 306 euro/sq ft to buy in the district of Bocconi, while in Bicocca the average price is around 2,300 euro/m2 or 214 euro/sq ft.
In third place is Florence, with an average value of 2,650 euro/m2 or 246 euro/sq ft (+ 2.2%). For those who decide to buy in the Gavinana neighbourhood, the price of 2,300 euro/m2 or 214 euro/sq ft is significantly cheaper than in Rifredi (2,700 euro/m2 or 250 euro/sq ft) and Campo di Marte (2,900 euro/m2 or 270 euro/sq ft).
How much does it cost to invest in student rental apartments instead?
"The gross annual returns, before expenses and taxes, that can be obtained from investing in an apartment and renting it out to students today are included in a range of between 4.8% and 5.8%," says Ghisolfi, "at least one percentage point more than houses rented in other areas of the city.
“Only a massive input of new housing dedicated to student rentals could significantly reduce these numbers in the future. At present, we are beginning to see greater interest from large investors in this segment of the residential market, but we are far from European volumes (in Germany, in 2017, investments in student houses exceeded one billion euro, for example).”