Wroclaw’s hulking Soviet-era public dormitories held little appeal for Odysseas Savvas when he moved to the Polish city from Greece to study business at university. Instead, he opted for his own room and bathroom in a newly built private residence.
“The other dorms were really old from the communist times and really simple,” Mr. Savvas, 19, said. “I couldn’t be comfortable sharing a room and a bathroom with four people.”
Investors and developers sizing up the potential for new student housing projects in central and eastern Europe believe there will be many more foreign students just like Mr. Savvas willing to pay extra for their creature comforts. That’s why the company behind the new residence in Wroclaw which has a gym, private kitchens and big-screen TV in the communal area, is planning to quadruple the number of student housing projects it runs, in the next two to three years. Central Europe’s old world charm and tradition-steeped universities are increasingly attracting international students eager to study in English-language degree programmes for a fraction of the cost back home.
It’s also creating a housing crunch with many older dormitories filled to capacity and students snapping up rooms in private residences such as the nearly 500-bed residence in Wroclaw, which opened in September.
“We can see the demand is there,” said Nebil Senman, managing director of Griffin Real Estate, which operates the residence in Wroclaw and is backed by Los Angeles-based Oaktree Capital Management. “We are currently over-subscribed.”
“In the last six months, I’ve really seen the market pick up. There is more demand from international investors approaching us. This is something we are considering,” said Mr. Senman, who oversees four student housing projects in Poland at the moment.
Simple economics
In Poland, the region’s biggest country and largest economy, the number of international students has surged more than four-fold to almost 57,000 in the past nine years, according to government statistics compiled by StudentMarketing, an independent research company focused on student housing data. It has jumped 72% to 38,868 in the Czech Republic, while Hungary’s international student population has doubled to nearly 27,000 over the same period.
For investors, it’s simple economics. More students and not enough beds in cities where development costs are lower than in western Europe means higher yields on new projects than in more mature western European student housing markets.
“Central and eastern Europe are on the radar of those big investors who have established their presence in western Europe and it is a natural next move for them,” said Stefan Kolibar, head of marketing at StudentMarketing. “The region is even more under supplied with not as much volume,” he said. Mr. Kolibar said the percentage of private beds to international students was 5% in Prague, 1% in Warsaw, 9% in Wroclaw and 13% in Budapest compared to 16% in Barcelona, 55% in Amsterdam and 30% in Dublin.
In Budapest, Austrian company value one opened the 418-apartment Milestone project last year offering a roof-top terrace, high-speed internet and a fitness room.
It now has its sights set on the Czech Republic and Poland, which entered the top 10 destinations for the Erasmus programme for international students, a spokeswoman said.
“Both markets are interesting for us because they offer a high number of students from all over the world and they are near our home market,” said spokeswoman Caroline Hadl.
Hedging your bets
Investors such as Corestate Capital Holding see student housing as a durable asset because of the perpetual pipeline of domestic and international students, said Philipp Rohweder, one of the company’s investment directors. His firm is keen to invest in projects in central Europe, especially Poland, where a thriving student population, years of economic growth and a stable currency, provide opportunity for investors in an emerging market.
The country of 40 million people also has a large number of university towns attractive for investors who want to establish a network of student housing projects, he added.
“Student housing is hedging your bets against other economic cycles because when the economy is good everyone wants to study and when it isn’t everybody has to study,” he said.
