Le logement pour étudiants en Hongrie est en plein essor. C’est en tout cas ce qu’il ressort d’un rapport récent de CMS et cela pourrait bien être le prochain boom dans la région CEE.

Student housing has become a distinct asset class with its own specific needs. It is also an asset less sensitive to economic cycles, especially compared to commercial spaces.

Investments in student accommodation are commonplace in Western Europe. Among the various markets, the British market comes out on top.

Cet actif a fait l’objet d’investissements conséquents depuis 2008 jusqu’à atteindre 4% de l’ensemble des investissements sur ce marché.  Aucun autre pays européen n’a approché ce seuil d’investissement.

What is the situation in the countries of the so-called EEC region (Central and Eastern Europe)? And more specifically, what is the situation regarding student housing in Hungary?

Comme analysé dans le The Real Estate Compass report on the CEE region, de nombreux facteurs pointent vers un développement important du logement pour étudiant dans une période de 4 à 8 années dans cette région.

Student accommodation as a fully-fledged asset

Analysis of these different markets in Western Europe has shown that, despite the increase in the price per unit, yields have been maintained.

The report highlights several implications:

• Rents have kept pace with the increase in unit prices, thus maintaining a solid return on investment
• Compared to other asset classes that have increased significantly since 2009, student housing is currently cheaper
• The performance of student housing tends to demonstrate that the risk associated with this asset class is low, even during periods of economic turmoil such as the 2009-2012 period following the financial crisis.

These characteristics point to a sector described as "counter-cyclical":

“Student activity and spending do not evolve according to the economic cycle. Thus, demand is not correlated with that of sectors more linked to faster GDP growth, for example offices or the industrial sector.”.

These characteristics deserve to be examined now, given that estimates of GDP growth in the euro area (and other countries around the world) are falling and the risk of recession is increasing.

Economic growth could well be slowed for the next two or three years, somewhat like the weak period of the cycle observed between 2000 and 2002, rather than the sharp collapse and recovery of 2008-2009. This makes this asset class all the more attractive compared to commercial real estate, for example

Factors favorable to investment in student housing in the CEE region

Student accommodation in Hungary: a lack of quality

The various surveys carried out tend to demonstrate the overall dissatisfaction of students with the quality of accommodation offered.

Furthermore, forecasts for 2028 suggest a shortage of student accommodation in Warsaw, Budapest, Prague and Krakow:

"The current supply of student accommodation in the main markets of Central and Eastern Europe is very limited. 20 properties exist and only eight more are under construction.

A lack of financial accessibility, the availability of cheap but poor-quality private housing and state-owned dormitories, as well as tight university budgets, have hampered development in the past.

A major demographic shift, with a growing proportion of international students, is gradually changing expectations towards international standards

The increase in the number of international students

International students play a key role in the demand for quality student accommodation, including in Hungary.

These students are increasingly going to countries in the EEC region that offer an affordable cost of living and reputable universities.

These rental clients arrive in these countries with high expectations regarding their accommodation.

However, these students arriving in Hungary for full courses often complain about the quality of accommodation. The average standard of student housing in Hungary remains quite low despite recent improvements.

It is in this sense that we are developing numerous investment projects likely to meet the expectations of this rental clientele with specific needs.

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