08/03/2011 Savills tips German student property for investment The “undervalued” German student market is ripe for investment according to global agency Savills.
Research conducted by Savills found that in the last ten years the number of students in Germany has increased by roughly 18% to over 2.1 million. And currently, there are only 181,000 places available in publicly funded halls of residence.
The Savills’ survey looked at German cities with at least 10,000 students. It applied four indicators – market size, supply of halls, apartment vacancy rate and income burden - to measure the status quo, and five others – market attractiveness, demand trends, demand projection population projection and economic prosperity – to measure market dynamics.
It found that Darmstadt, Munich and Hamburg offer the lowest risk for investors with scores of between 8.0 and 8.2, while Halle (Saale), Braunschweig and Magdeburg are the highest risk cities with scores of between 3.3 and 3.6.
Matthias Pink, head of Savills Research in Germany,says: “There is some evidence that both the high-risk and low-risk locations include markets that are under-valued and investors would be wise to take a closer look at these.”
“The vast majority of students prefer a rented apartment, which underlines the latent potential for private investors.”
“The most promising investments would appear to be in those markets currently showing below-average conditions combined with favourable development prospects.”
“Opportunistic investors may rely on these markets to become core over the next few years, but even cities where this situation is reversed should appeal to opportunistic investors.”
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