British student accommodation provider takes on France
Victus, a UK-based fund providing purpose-built student accommodation (PBSA) in Europe, has bought two buildings in Chambery, France, the first in its expansion into the country.
France has long been known to be short of student accommodation. In 2012, Le Havre city council even resorted to housing students in renovated shipping containers (pictured above) and around 75% of students in France have to do without purpose-built accommodation.
That shortage of accommodation, along with the lack of competitors supplying it, is clearly tempting to UK providers concerned at the crowded market for PBSA suppliers at home. UK-based Victus European Student Accommodation Fund IC Ltd is pioneering PBSA in France with this first project. The fund started off buying two buildings in Chambery, where it is going to develop 144 fully-let apartments within the buildings. Chambery, a small town in the region of Rhône-Alpes, hosts the renowned engineering school Arts et Métiers ParisTech.
Patrick Reynolds, marketing executive at Crosslane Fund Managers, the Promoter of the Victus European Student Accommodation Fund, told OPP Connect that the Fund sees tremendous opportunities in France. “There is a shortage of PBSA not only in Chambery, but all over the country.”
Victus is currently looking at various sites for PBSA in major French cities such as Bordeaux and Paris. Crosslane is working in a joint venture called CBB JV, with BBFD investments in France in order to get better insight into local market developments.
Elsewhere in France, the main student accommodation provider is Crous, with 687 houses in 244 towns across France, accommodating 154,000 students. Together with private housing providers that amounts to around 342,500 units, while student numbers are pushing 2.3 million.
Victus wants to move against the current shortage, “Our aim is to provide 5,000 new student beds in France within the next five years,” says Reynolds. This forms part of Victus’ ambitious goal to stock up from their currently owned 1640 beds in operation and development to 17,500 all over Europe within five years, turning Victus into the largest pan-European PBSA provider.
Reynolds explained, “PBSA market in mainland Europe is about ten to fifteen years behind the UK and US markets – and Crosslane would like to fill in the gap, concentrating on France, Germany and the Netherlands.”
International students number 427,000 a year in France, the third largest number of any country except the US and UK, according to the latest Unesco-statistics. New laws and regulation introduced by the French government in 2013 should attract even more in the future, especially the introduction of a multi-year visa for researchers and students. Good-quality PBSA is particularly vital for attracting international students, who can experience difficulties finding their own apartment in the private housing market.
All in all, prospects say the market is not likely to calm down in the next few years. The French government has plans to provide 11,000-15,000 new student housing units by 2020, as Crosslane stated in a press review.
Returns for investors in the PBSA sectors in France range between 6% in Paris to 25% in Grenoble (For further details consult the OPP Global student accommodation report), offering opportunities for returns outstripping the average PBSA-returns of around 6-9%. This might be one more reason why Victus chose to start investments in France – and why it decided to start off in a smaller town instead of acquiring a building in Paris, where Crous is the clear leader in PBSA and returns are lower.
Calls for PBSA are getting louder in most European university cities, as shared student apartments cause a shortage on family apartments. The cries of students wanting to move out of houses of multiple occupation (HMO) are getting louder. In the UK, many funds have discovered the investment opportunity and PBSA is more widespread than in France or Germany. Some 79% of the new student beds, which could be provided in the UK in 2013, came out of the private sector.
Besides France, Germany is a second promising new market, hosting 5% of the international students worldwide. Victus invested in Onsabrück and Oldenberg, two smaller university cities in Germany. The fund predicts large growing potential for the next years in the international PBSA market.
Pinnacle MC Global Network, another Britain-based provider of PBSA, is constantly looking at and being offered sites around the UK and further afield, as PR Officer Alex Shaw told OPP Connect: “In recent months we’ve seen a trend for sites outside of the UK. However, we feel that for the time being, our investors are best served by property based within the UK, away from the financial pressures of the Eurozone.”
Unite UK Student Accommodation Fund (USAF), one of the biggest PBSA operators in the UK, just acquired another 2,904 new beds in the UK. That means USAF will be operating 43,953 beds in the 2014/2015 academic year, as Sharecast reported . Unite are present all over the UK, namely in 22 cities and towns, but haven’t expanded to international markets yet.
By Larissa Rhyn, OPP editorial intern
