Private providers are making inroads into this large market Germany is host to 2.7 million higher education students. Unlike its European neighbours, no one city dominates. There are eight cities with more than 50,000 students, and a further 23 with between 25,000 and 50,000 students.
Germany is a highly affordable country in which to live and study, a factor that has sustained enrolment growth. Domestic student numbers have grown 39% in the last decade (but are set to stagnate due to demographic change), while international students now account for 12.3% of all enrolments.
In a bid to further boost German universities’ global profile, a federal initiative was introduced in 2005 to promote outstanding research by providing additional funding to selected elite institutions.
The semi-public body Studentenwerk dominates provision in Germany. In 2015, there were around 238,000 publicly subsidised beds, an increase of 15,000 additional on 2005 levels. Over the same time period the number of students grew by around 770,000, squeezing the supply imbalance further.
Set against this backdrop, private providers are making inroads. Private operators now account for around 22% of stock in the 30 largest university cities, a figure forecast to reach 29% by 2021.
Supply has been focused on cities where open market housing is most constrained. Munich is home to the largest amount of private purpose-built accommodation, but is set to be overtaken by Berlin, where 8,800 beds will add to the existing private stock of 1,600.
Private providers target the premium end of the market, with rents exceeding €500pm, double that of Studentenwerk. The price premium reflects superior quality and amenities and the fact 69% of private operator stock are individual apartments. The majority of Studentenwerk stock, by comparison, are rooms in shared apartments.
The German market has attracted the attention of international investors. The UK’s GSA group acquired a 1,000 unit portfolio focused on Frankfurt, Münster, Darmstadt and Dresden and further expansion is planned. Cresco Capital has announced plans to invest €300m in the sector.