The alternative sector is becoming a more important focus. Student accommodation in Poland is such an asset class that deserves closer attention. The first student investment in Poland was the purchase of two student houses in Lublin by Griffin Real Estate from TBV in 2016. Investment activity is currently restricted by the lack of supply. However, with a number of assets in the pipeline, investment activity could grow in the near future once assets stabilise.
The number of international students in Poland is on the rise despite the fall in the total number of students. The number of students in Poland was at 1.4 million in 2015 which represented decrease by 4% in comparison to the year before. The number is expected to increase to 1.5 million by 2035. In addition, there were over 57,000 international students in 2015, showing an increase of 24% in comparison to the previous year, now making up a mere 4% of Poland’s total student population.
More developed student housing markets such as the UK, Germany, France and the Netherlands, where this percentage is above 10% suggest there’s room for growth in Poland. Numerous promotion campaigns held to attract more foreign students to our country, one of them being Study in Poland organised by the Conference of Rectors of Academic Schools in Poland.
The majority of student housing is owned by public educational institutions and is usually of a low grade. In 2014 there were 504 student dormitories in Poland of which nearly 92% were public ones. The rooms offered in public dormitories generally comprise of 2, 3 or 4-bed rooms. Private student houses on the other hand usually offer single or double occupancy rooms.
The supply (number of beds) to demand ratio (number of students) is an important factor used to determine investment into the purpose built student accommodation sector. The current ratio in Poland is 9% which is below levels observed in more advanced markets such as the UK (24%), the Netherlands (16%), France (15%), US (12%) and Germany (11%).
The student accommodation market in Poland remains in its early stage of development. The number of privately owned student accommodation is significantly lower than those offered by public institutions and the buildings are also typically of a smaller size.
The number of established institutional investors in the student housing market is very limited. The market remains extremely fragmented with the majority of the private market made up of individuals rather than investment funds or institutions. Private student houses owned by these individuals are quite often located in old tenements or houses which are merely adopted for student accommodation.
The price of renting student housing in Poland ranges from PLN 250 to PLN 1,400 per month per person depending on the standard and number of beds in a room.
The rent in private market tends to be higher than in the public market given its better quality.
The lowest rents are in 3- and 4-bed shared rooms in public dormitories with a shared kitchen and bathroom. The higher the standard the higher the rent. The highest rents are in refurbished dormitories but the supply is very limited. The supply of accommodation below PLN 400 is also very limited.
Demand is high
Occupancy rates in public dormitories have been falling since 2009, however the opposite can be seen in the private sector where these rates have been increasing. Availability of beds in student houses is low, and where there is availability, this is usually due to the accommodation being dated and mispriced. As a result the demand for student housing is estimated to be much higher than previously reported by the Central Statistical Office. According to our research, occupancy rates in both private and public student houses in the biggest cities are at 95-100%.
The demand for private student houses is generated mostly by international students, for whom renting in high standard, single-room student housing is a relatively inexpensive and a convenient option. As the number of international students is forecast to grow, so is demand for higher quality student accommodation which at present remains highly undersupplied.
Griffin Real Estate is the first institutional actor to have invested in the student accommodation market. The firm has transformed an old hotel in Poznan into student accommodation, built a new residence in Lodz, purchased one in Lublin from TBV and plans to develop more projects in Warsaw, Poznan, Lodz, Lublin, Krakow, Wroclaw, Katowice and in the Tri-City.
Another active developer worth mentioning is TBV from Lublin which developed four dormitories in Lublin. The market is becoming more attractive stirring interest of other developers such as Golub GetHouse, Triton Academicus and Budner.
Budner has two separate investments planned in Warsaw. These plans accompany future investments in Krakow, Wroclaw, Poznan, Gdansk, Rzeszow and Lublin. Golub GetHouse is also planning development projects in the majority of the biggest Polish cities. Triton Academicus have two developments in the pipeline, one in Lodz and the second in Rzeszow.
Public-private partnership are also in play
Some investors have been known to work in cooperation with universities to upgrade and manage the publicly owned accommodation. In October 2012 BYPolska and Jagiellonian University in Krakow signed the first public-private partnership (PPP) agreement aimed to modernise student dormitories. BYPolska has already redeveloped the two dormitories and is planning to redevelop a third one.
In addition, some higher-education institutions, such as Cardinal Stefan Wyszynski University in Warsaw, plan to build dormitories using the PPP model.
The private student housing market in Poland is still not well established; it is very fragmented and in its early stages of development, but the situation is starting to change. With the participation of new players who are interested in developing and investing in student housing, the market is surely to grow and expand. It can be perceived as an opportunity and investments in this market can be very profitable for the early comers.