European student market Investor interest in European student housing is well directed. Europe’s rapidly growing student housing sector is supported by Europe’s robust and fast-growing student market. The number of higher education students is anticipated to grow to 262 million globally by 2025 and Europe is one the biggest recipients of these students. Together with North America, Europe accounted for 58% of all internationally mobile students in 2010. Global student mobility is increasing, with growth of students outside their country of residence forecast to grow to 8 million by 2025, from 4.1 million in 2010 (Graph 1).

In difficult economic times, and as youth unemployment has soared in many European countries, more people have sought higher education to improve their employability. This trend has been particularly marked in the wake of the Eurozone crisis, especially in economies such as Spain. The total number of student registrations increased by 5% in Spain, 4% in France and 9% in the Netherlands between 2010 and 2011. In Italy, the number of students has remained stable over the same period.

The largest student market in Europe is the UK (Graph 2), with 2.5 million students, closely followed by Germany, and France (both 2.4 million). Of these, the UK attracts by far the largest number of international students (in excess of 400,000), followed by France and Germany (see Graph 3).

The UK also has the largest number of non-EU students by number, who account for 68% of its international student population. Language is a strong determinant for many European student markets. France has a large proportion of non-EU students (77% of its foreign student total), who are predominantly from French-speaking regions of Africa. Spain is popular with students from Latin American countries (69% of Spain’s foreign students are non-EU), tuition in Spanish a major draw for this group.

As global recruitment strategies become the norm, the profile of the European student market could increasingly tilt towards non-EU students. In a bid to capture more lucrative Asian students, countries such as the Netherlands, which currently see most of their foreign student demand from neighbouring European countries (just 18% of the foreign students in the Netherlands are non-EU), are actively looking to increase overseas student numbers, by offering more courses in English.

The strategy is paying dividends. During the 2010-11 academic year, the number of foreign student registrations increased by 8% in France, 5% in Spain, 4% in Italy and by 18% in the Netherlands. Milan University will be teaching all of its courses in English from 2014. Such cities are likely to see significant increases in their international student populations.

Cost of education

While the UK is the largest recipient of international students in Europe, study in mainland Europe looks particularly good value, offering significantly lower tuition fees (Graph 4).

Domestic fees in all the major mainland European student markets are under £1,500 per annum. Higher education in Austria and Sweden is free for domestic students, while fees are nominal in France (although administrative fees can push the true cost higher). In Germany, there are no fees for either EU or international students, with the exception of Bavarian universities which charge £850 per annum.

The affordability of higher education in mainland Europe has been a key driver of the growth in student numbers in recent years, particularly given weaknesses in the wider European economy.

Demand for lower cost international education is likely to grow, particularly as the international student population expands beyond the very wealthiest in other countries. The growth of the middle classes in emerging economies will be a key driver of student housing demand in the coming decades.

Student housing provision

The provision of student housing and the behaviour of student occupiers across Europe varies significantly between countries. Broadly, students in southern Europe tend to live and study in their home town or region, the majority living at home with parents. In Italy, for example, 73% of students live with their parents, according to Eurostudent (Graph 5). In northern Europe, most notably in Austria, Germany and the UK, students are more likely to live in purpose built student accommodation or seek housing in the private rented sector.

These cultural trends have implications on the demand for purpose-built student housing in some markets. Tendencies for many European students to live with parents reduces the requirement for dedicated student accommodation in those locations.

Across Europe, the provision of purpose-built student accommodation is low. The provision rate, calculated as the total places in student halls over the total number of student registrations across the cities we have monitored in this report, ranges from 2% in Italy to 23% in Sweden.

This provision rate must be seen in the context of the broader cultural trends. For example, while the provision rate in Italy is exceptionally low, where students do not live with parents Italians are accustomed to seeking accommodation in the private sector.

Rising incomes, improving standards of living, and rapid growth in the number of international students mean a significant group of students have higher expectations of their accommodation.

A decade ago the UK was characterised by sub-standard student accommodation. The private sector has filled a gap in this market to meet the demands for quality accommodation. Mainland Europe still presents an opportunity to do the same.

Taken from
Spotlight: European Student Housing