Competing for students

It will come as no surprise that the US, the UK and Australia dominate the market for international student programmes. But these traditional strongholds of international student programmes are facing increasing competition from a wide range of countries across the European continent which are lifting their game with a potent offering of their own English Taught Programmes (ETP) combined with lower cost tuition.

“Countries such as Germany and the Netherlands have instigated national internationalisation programmes and improved the marketing of their universities in concerted efforts to catch up with the UK and US,“ Paul Tostevin, Director of World Research at Savills said. “Their English-Language programmes are a real game changer.”

Erasmus Plus

The EU’s Erasmus Plus education programme is also playing a key role in the rise of Europe’s winning creative cities. The €16 billion student funding integration programme is part of the European Commission’s Lifelong Learning Programme. Every year, more than 300,000 students study or train under the Erasmus Plus umbrella and so far, it has driven the cross-border education migration of 5 million of Europe’s brightest and most talented young people.

New priorities

Historically, a university’s position on global ranking systems has been a key component of its ability to attract foreign students, but this trend appears to be waning, as students are increasingly realising that attending a university or college with high rankings does not necessarily mean that they will achieve success in a programme or enjoy study abroad.

Indeed, research by Savills indicates that the rankings for preferred student destinations are fundamentally reversed when the cost of living, accommodation and tuition fees are taken into account. The traditional tier-one cities based on the quality of higher education programmes such as Boston, New York, San Francisco and London score at the upper end of that scale while European cities such as Warsaw, Vienna, Berlin, Prague, Milan, Lisbon, Paris and Amsterdam make the grade in terms of overall affordability.

Attractive cities are undersupplied

Somewhat paradoxically, however, most if not all of these more affordable student destinations rank among the most undersupplied cities across Europe. Data from Bonard, an independent research company focused on the student housing asset class, identifies Rome and Florence as having the lowest provision (3%), followed by Porto, where 3.5% of the total student population has dedicated bed spaces.

Southern Europe in general performs particularly poorly on this front, with Italy scoring less than 5% overall and the Spanish cities of Madrid (5.7%) and Barcelona (5%) scoring only marginally better. By contrast, the provision of purpose-built student accommodation (PBSA) is highest in the UK where 27% of all students can be accommodated.

Undersupply is fuelling a growth story

The undersupply of PBSA is fueling one of the biggest growth stories in the European real estate industry with a rising number of institutional investors drawn to the asset class due to its secure income streams, high occupancy rates and low correlation to a downturn. In that context, a recent study by Union Investment and bulwiengesa sheds light on the best opportunities for investment in new student housing in Germany which, interestingly, is not topped by the usual suspects such as Berlin and Munich.

Indeed, according to this study, the university city of Münster, with almost 60,000 students, is the most attractive location in the country followed by other cities that are somewhat off the beaten track such as Cologne, Stuttgart, Karlsruhe and Hanover. The ranking is part of an in-depth study comparing supply and demand in this sector across 61 German cities using 18 different metrics and also examines four non-German cities: Dublin, Amsterdam, Paris and Vienna, all of which ranked in the top 20.