STUDENT HOUSING NETHERLANDS - 2019 OPERATION AND/OR REAL ESTATE? - The Class of 2020
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CBRE RESEARCH 2019 STUDENT HOUSING NETHERLANDS OPERATION AND/OR REAL ESTATE?
CLASS OF 2020
It was a pleasure attending the Dutch -dorms with the first PBSA schemes being
regional session of the Class of 2020. introduced, including schemes from IC
We would like to thank you again for Netherlands and The Student Hotel.
joining. Following up on our market
presentation, we have highlighted the key Since then, development has picked up significantly
points in this Market View. Enjoy reading introducing various new PBSA schemes. Xior, for
this, and if you have any questions or example, has shown a strong growth in the past
would like to discuss this further, several years. All investors and developers have
please feel free to contact us. been attracted by the strong student housing market
Warm regards, fundamentals. On the one hand, the number of
Hero and Niels students is forecast to continue to rise. The
Netherlands attracts many international students
due the good reputation of the Dutch educational
Now and then system and the numerous English taught programs
In 2015, CBRE wrote a report on the Dutch available. On the other hand, the PBSA market is
student housing market. At that time, the Dutch still very fragmented with substantial undersupply in
PBSA (Purpose Built Student Accommodation) many cities. This enables operators to maximise
market was in its infancy. The market was occupancy rates, revenues and profits.
dominated by traditional student rooms and
2 2019 CLA S SO F2 0 2 0
STUDENT HOUSING
The table below illustrates the market tension for Interestingly, cities like Deventer and
student housing in various cities in The Netherlands. `‘s-Hertogenbosch are indicated as very tight
Based on this information, we can conclude that in markets while these are small towns that do not
the current market the student housing market is still have research universities. Cities with research
tight. We see this tension also in the wider universities are of course the usual targets for new
residential market. Although the Kences data PBSA schemes. Despite their relatively small size,
suggests that the student housing market in the undersupplied local markets lead in our view to
Groningen is balanced, the University’s call for interesting opportunities for new PBSA schemes.
action to their staff last year to temporarily house
(international) students suggests otherwise.
Figure 1: market tension in Dutch cities
'14-'15 '15-'16 '16-'17 '17-'18
Amsterdam ++ ++ ++ ++
Arnhem o o - o
Breda - - o o
Delft o o + +
The Hague ++ ++ ++ ++
Deventer ++ ++ ++ ++
Ede + ++ + +
Eindhoven + + + +
Enschede o + + +
Groningen o o o o
Haarlem ++ + ++ ++
Leeuwarden - - - -
Leiden + ++ ++ +
Maastricht o o o o
Nijmegen o o o +
Rotterdam + ++ ++ ++
‘s-Hertogenbosch ++ ++ ++ ++
Tilburg o o o o
Utrecht ++ ++ ++ ++
Wageningen - - - -
Zwolle ++ ++ ++ +
++ very tense + tense o balanced - relaxed -- very relaxed
Source: Kences, 2018
2019 CLA S SO F2 0 2 0 3CLASS OF 2020
Investment market Interestingly, Dutch PBSA schemes are
predominantly operated by owner linked operators.
We have seen the Dutch investment market for As an example, Xior, The Student Hotel, Greystar
student housing growing substantially since 2015. and IC Netherlands operate their own schemes. As
Previously, investment in PBSA was low as this was contrast, the prime net initial yields for the other
an upcoming market. Up till then, student housing asset classes often reflect long leased properties
was mostly provided by non-profit social housing providing good covenant strengths. Should PBSA
corporations. Most of the recent investment schemes be offered on long leases, rather than
transactions relate to PBSA schemes compared to owner-occupied, then even sharper yields could be
previous deals where private investors would invest obtained. The recent deal with Change=
in traditional student housing property. demonstrates this with a net initial yield below
4.00%.
As the market matrured, we have seen strong yield
compression in the traditional real estate investment Prime high street retail 2.90%
classes such as offices, logistics and residential.
Yield compression has also followed for PBSA Prime multi family 3.15%
schemes. Previously the prime net initial yield (NIY)
for PBSA schemes moved around 6.00% whereas Prime office 3.25%
the current prime NIY is about 4.50%. It is our view
Prime logistic 4.45%
that although PBSA yields have compressed, but we
are of the opinion that the market can mature even Prime PBSA 4.50%
further. That could potentially result in further
notable yield compression. Prime shopping centre 4.75%
Figure 2: Investment volume (millions)
€ 700
Millions
€ 600
€ 500
€ 400
€ 300
€ 200
€ 100
€-
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Q1
Student Housing
Source: CBRE Research
4 2019 CLA S SO F2 0 2 0STUDENT HOUSING
Start of a new phase Splitting the companies into an Operator and a Real
Estate vehicle will drive further growth and
As the Dutch PBSA market continues to mature, it is
professionalisation of the market. As investors are still
our view that this market is at the brink of a
looking to acquire investments but supply is limited,
consolidation phase in which the operation and
timing is key. Due to the strong investment appetite,
ownership of PBSA schemes will be split. We base
the current economic climate and the search to
our vision on very similar parallel developments that
deploy capital, it would now be a good time to split
we have seen in other sectors. Examples are
the company into an Operational Company (OpCo)
established markets like the airline-, ship- and
and a Property Company (PropCo). In that way,
logistics- industry who previously combined
operators can focus on the business and growth is
ownership and operation. Through time, more and
easier to leverage.
more operators focused on their key strength and
goal, the operation. As a result, the operators now
As the Dutch PBSA market matures we also expect
lease property instead of owning it. In The
that consolidation amongst operators will occur in
Netherlands, we have also seen this more recently in
the next years. This has also been the case as the UK
the senior living sector. Several years ago most
PBSA market matured, we strongly believe that The
operators would purchase the properties for their
Netherlands will follow that trend!
operation as there was a limited number of investors
interested in that product. Today, senior living
operators sign long leases instead of purchasing the
properties, benefitting strong investor demand.
2019 CLA S SO F2 0 2 0 5CONTACT
If you would like to discuss our vision on
the PBSA market in more detail we would
be more than happy to arrange a
meeting. Please feel free to give us a call
or send us an email. We can always
explore opportunities together.
Hero Knol Niels Koenen
Director Senior Consultant
m: +31 (0)6 55 384 395 m: +31 (0)6 11517075
e: hero.knol@cbre.com e: niels.koenen@cbre.com
Anthony Fokkerweg 15 Gustav Mahlerlaan 405
1059 CM Amsterdam 1082 MK Amsterdam
t: +31 020 626 26 91 t: +31 020 626 26 91
w: cbre.nl w: cbre.nl
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DISCLAIMER
Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we
have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to confirm independently its accuracy and
completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot
be reproduced without prior written permission of CBRE.
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