Demand for Student Housing
The demand for housing in student complexes is currently mainly driven by more than 90,000 international students. This number is expected to go up to 125,000 in the coming eight years.
International student enrolment has not declined as a result of the pandemic. This share has even risen slightly by around 1%.
Pressure on the Housing Market
The pressure on the student housing market has further increased with added demand from starters. As a result, chances that vacancy rates for student housing will increase become even smaller.
All of this means that the current shortage of 17,300 units will go up in the coming seven years to a total of 32,000 units based on the planned developments already in the pipeline.
Rising shortages will lead to rising rents. In the last year, the average rent for a student room in the Netherlands went up by 14%.
Risks for Student Housing
The risks for student housing are declining which is resulting in a current gross initial yield of 5%. Investors have taken note and are becoming increasingly more interested in these types of developments. After all, student housing is a safe haven in this current economic downturn.
Leiden takes the Lead
Significant shifts have occurred recently in the Savills Student Housing Ranking. Leiden takes the lead, followed by Delft and The Hague. A high ranking indicates that these cities hold interesting opportunities for investors.
Effects of COVID-19
Education has shifted to an online format due to COVID-19. In the short term this could result in a decline in the demand for student housing. However, online education cannot be considered an equal alternative for face-to-face education in the long term. In the long term this will therefore not lead to a major decline in the number of international enrolments in the Netherlands.
In short, the negative effects of COVID-19 will have an impact in the short term but occupancy rates will only be slightly affected. The Dutch student housing market will continue to grow in the long term.
Sources National Monitor for Student Housing 2020, Kences, Statistics Netherlands, Kamernet, ING Economic Bureau, Nuffic, Brainbay, Vastgoedmarkt
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