The Netherlands is one of Europe’s most popular places to study abroad. In 2018, 122,000 international students from 162 countries were enrolled in Dutch universities. And the student population is set to continue to grow. By the 2025-26 academic year it will be 3.3% larger than it is now.
High demand for student accommodation and a lack of stock has led to more investors entering the purpose built student accommodation market, in a hope of capitalising on the increasing need for student housing. However, it is a niche and difficult asset class in The Netherlands – acquisition costs are higher compared to the yields than can be achieved.
But, the outlook for investment in this asset class is positive.
Businesses such as The Student Hotel and Student Experience continue to grow their offerings for their student tenants, providing not only accommodation, but also ancillary services in the buildings they operate. The restaurants, gyms and public areas are freely accessible both for residents and for members of the wider community. Mixing services creates and encourages a diverse community, not only for those who live there but for the people in adjacent buildings.
Multi-family living is also on the rise in The Netherlands, with demand from domestic and international investors high – multi-family investment totalled £5.6 billion in 2019, and there was a 50% increase in residential investment in the same year.
This type of asset class is high on the list of investors who are looking to diversify their portfolio, especially those that are dominated by commercial property assets. Foreign and domestic companies such as Quarters and OurDomain are bringing co-living solutions to the Netherlands, though these schemes have been slow to mature.
The market is full of potential yet few are willing to execute, largely due to high land costs. High prices from the outset leaves developers pushed to complete the project and earn a profit. Construction prices are equally competitive, resulting in a market where it is expensive to buy and build, and there is no assured profit. The two combined has raised concerns about the sustainability and feasibility of these assets, as savings will have to be made somewhere. In order for the market to be truly viable, acquisition and construction costs must soften.
Whilst there will certainly need to be some changes, the future is bright for the multi-family and student accommodation sectors in The Netherlands.