The student residence market - Italy

1.2 A Global Profitable Market

Over the past six years there has been an explosion of institutional investment into student accommodation around the world on the premise that demand for housing is robust.

In **** global student housing transactions reached a value of **.* billion dollars. The considerable growth has been fueled by the progressive relevance student housing has gained in the eyes of investors, due to rapid growth in the number of international students. 

Student Housing Investment World, ****-****, in billions of dollars Source: ****

Student accommodations are projected to increase following the forecasted positive flow of students moving across the globe boosted by progressive “international mindsets”. In **** the number of international students abroad amounted to *.* million, the figure is expected to reach * million by ****. Generally seen as a potential alternative asset investment for a portfolio diversification strategy, student housing represents a valuable opportunity because of its undersupply in numerous countries. Demand is increasing at a global level due to greater student mobility and supply continues to be low, ranging from *% to **% in the most saturated markets. [***].

A developing market in Europe

In **** the European student housing investment volume reached *.* billion euros. The development of the European student housing market growth has been mainly fueled by the increase ...

1.3 The Italian Market for Student Residencies

Size

There is lack of information on value and market size of student housing in Italy. With the available data it is though possible to give an estimate of the current potential of the industry.

Starting from the number of national students in Italy (***) of *.** million, the market could grasp **% of it as latest figures show that, on average, **% of Italian students still live with their parents [***].

Therefore, approximately ***,*** Italian students plus **,*** foreign students in **** were looking for an accommodation, for a total of ***,***. Thus, student housings could appeal to more than five hundred thousand students. If that were the case, hypothetically, splitting half of the students in rental houses and half in student housings, the market could grasp circa ***,*** students. 

Price

In terms of pricing on the other hand, considering the table shown on page ** of the “Supply Analysis”, the starting point is to find an average between the minimum and maximum monthly prices for both a single and shared room. After the calculations the following results are obtained:

The hypothesis is the following: **% of students choose a single room and **% choose a double room. In addition, having data on what are the most popular forms of student residencies (***), the ...

1.4 COVID-19 Impact

The COVID-** Pandemic has brought about devastating consequences for higher education in Italy. Indeed, many Universities have been forced to keep their campuses closed for months to avoid the spread of the virus contagion among their students. Consequently, given the fact that almost all lessons were provided online and in streaming, most University students who were enrolled in schools in a different city or foreign students coming from abroad decided to stay home at their parents' houses to avoid the commutation costs. 

In a survey by QS in September ****, **% of respondents stated that Covid-** had impacted their plans to study abroad. The majority of these (***) said they planned to defer their entry until next year. Inevitably, these changes and circumstances have left most student accommodation residences in Italy empty. 

Covid-** in Italy has thus had the side effect of emptying, from North to South, the rooms generally rented to students and off-site workers. Italy-wide, room availability compared to **** has in fact more than doubled (***) [***]. 

Variation of the Supply of Single Rooms with respect to ****, in major University Cities Italy, ****, in % Source: ****

Moreover, for what concerns the prices, the considerable increase in supply has, in turn, had the effect of curbing high ...

2.1 Demand Overview and Main Drivers

Student residencies value and volume is expected to benefit from the increasing number of students studying abroad, higher prices for alternative accommodations and changing lifestyle and habits of the current generation. ***,*** is the estimated number of students “fuori sede” (***) which could potentially choose a student accommodation as a housing accommodation. Nevertheless, out of this total market size, exclusively **% of students live in residencies [***].

The Main Drivers of the Demand for Student Housing undoubtedly are:

Number of students

In ****, in Italy, the number of full-time students in higher education (***) amounted to roughly *.** million. Student housing facilities are on the rise especially for international students, thanks to their social atmosphere which is valuable for foreigners away from home [***]. 

Number of foreign students on total number of students Italy, ****-****, in % Source: ****

Although the percentage of the number of foreigners studying in Italy with respect to the total number of students has grown, in **** it was identified at around *.*% representing a slowdown in growth with respect to the past years. However, it is also important to keep in mind that, within the scope of the Erasmus program, **.*** international students choose Italy as a destination country in ****, the fifth in all Europe.

Geographic distribution

The ...

2.2 Italy's Attractiveness as an Educational Country

Once established that the number of students’ inflow in Italy is directly correlated with student housing demand and potentiality, it is relevant to understand the reasons behind the students’ mobility.

The country attractiveness in terms of education can be therefore measured according to:

English Taught Programs University ranking vs teaching quality Cost of living

English Taught Programs

University classes in Italy are majorly taught in the national language, which is undoubtedly a factor affecting the inflow of international students. Although the number remains relatively low compared to the totality of courses available (***), the offer of courses in English has been progressively increasing. For the academic years ****/**** it reached ***. [***]

Number of english courses offered Italy, ****-**** Source: ****

University Ranking vs. Teaching Quality

Italy occupies a relatively low position in worldwide rankings, its Universities are in fact not considered among the top *** – with exclusion of the Politecnico di Milano  which occupies the ***th position. [***]. Although the factor has been extremely influencing in the past, as among the top three reasons to study abroad students named the school ranking in first position, currently a progressive number of incoming and perspective students are shifting their decision criteria.

A **** Hobsons survey has pointed out that for ...

3.1 Organization and Dynamics of the Market

An overview on student living arrangements

The market for student accommodations does not have the same size as the number of Italian students. The most influencing factor in this sense is the percentage of Italian students living at home (***) which leaves smaller room for maneuver on the remaining *%. The largest majority of that portion chooses to rent an accommodation, leaving approximately *-*% of the total living in student residencies.

A closer look into student housing

The student residency market in Italy seems to have a well-defined appearance. In fact, because of its relatively smaller size compared to the rest of Europe, the structure can be identified. In Italy in fact approximately ** thousand beds are missing to reach the European average [***].

Between **** and **** the number of available beds has increased from ** to ** thousand. [***] The year **** can be taken into consideration as a proxy since the number of additional available beds has gone up by less than * thousand additional units from **** to ****.

The student residences solutions are provided by:

Breakdown of Student Residences Solutions, by type Italy, ****, in % of the offering Source: ****

Geographical Distribution of Student Housing

The largest numbers of available beds for students are found in Lombardia, Tuscany and Marche. The ...

4.1 Housing structure

Student residencies in Italy can be distinguished in three types:

Hotel structure : layout based on corridors with rooms extending horizontally one in front of another. Mini accommodation : layout based on organizations composed by small apartments with multiple rooms and shared spaces. Mixed structure : layout based not on a particular structure. [***]

 Some distinctive traits that link the various Student Housing interventions currently underway in Italy are:

The offer is developed mainly in large cities, in easily accessible neighborhoods and in strategic positions with respect to University faculties and convenient to services and public transportation. Approximately ** square meters per bed are available. In general, these structures have between *** and *** places, an optimal range for the reduction of management costs. They are urban regeneration interventions. The most common types of accommodation are studios, one-bedroom apartments and two-bedroom apartments. Within each facility there is **% common space. Most student residences provide services such as: study rooms, gym, co-working space, support for teaching, laundry, etc. In addition, in order to promote sharing and collaboration among guests, the range of services is periodically renewed. The target to which these facilities are addressed does not only include students, but also young entrepreneurs, freelancers and creative people, through the ...

4.2 An Extremely Low Available Offer

Scenari Immobiliari estimated the number of beds available in Italy around **,***, the offer is far behind the potential demand in Italy and the European average. Indeed, the ratio between the totality of students and the available beds is among the lowest in Europe, with a coverage of exclusively *% [***]. 

Average number of beds in student housing Italy, ****, in % Source: ****

The distribution and structure of student residencies could also be a reason for the difficulty in reaching an equilibrium between demand and offer. The latter is true because at least half of the facilities are relatively small, consisting of between ** and *** beds. About **% of Italian student housing have a capacity of over *** beds. Among those the largest ones are Campus X Tor Vergata (***). [***]

Rome unmet demand

Rome's offer of residency covers just *% of the total number of students in need of housing, indeed recording the largest gap demand to offer among all European cities. [***].

Milan unmet demand

Milan conquers first position among Italian cities for hosting the largest number of foreign students and second most undersupplied market in continental Europe [***]. ** is the number of student housing in Milan with a considerably high number of beds available, circa *,*** and yet still only *% of potential ...

4.3 Swinging prices among student residencies

The table above identifies an average minimum and maximum price range for a single or a double room in three different student housing facilities. Segmenting the accommodation types based on managing authority, one can observe the pricing gap among the privately held and regional managed. The distinction between university campus and university residence is exclusively based on scope of the offer. The first category has a slightly lower level offering, whereas the second one has a more luxury offering. The wording difference is purely for the sake of the distinction in the offer scope. The university residence has a higher pricing because it includes additional facilities (***).

Taking Milan, with its ** student housings, an even greater price gap is identifiable. The city has a high cost of living, therefore, house prices compared to other cities are much higher. The latter reflects on student facilities’ prices as well, the structures go as low as *** euros and as high as *,*** euros per month (***) [***].

4.4 Offering propositions

Biggest student residencies

Camplus is among the largest student housing facilities, present in some of the most popular Italian cities, and soon on the Spanish territory with the opening in Pamplona. In Italy, it currently counts circa *,*** available beds, number that is projected to go as high as **,*** with the perspective openings of three additional facilities in Bologna.

Campus X conquers a relevant position in terms of scope of the offer with *,*** beds. The housing is present in Rome, Florence, Bari and Chieti. The biggest is Campus X Tor Vergata in Rome consisting of *,*** beds, half of the offering.

Biggest investors

The Student Hotel is one of Italy’s largest providers investing in the student housing segment. Currently present in Florence, it has announced a second opening in the city,

Fabrica Sgr has approximately *,*** beds in Bologna and Turin, managed by two different funds, Aristotele and Erasmo.

4.5 Incoming projects on the Italian territory

The starting point is a statement mentioned multiple times through this report: demand is higher than offer. From a simple concept, the basis for large investments has been created. Indeed, according to a **** survey on investment intentions **% of respondents stated that student housing is the residential real estate segment with greater maneuver and potential. [***]

Currently, there are ** new projects on the Italian territory aiming at the construction of student housings. Some are still in the idea phase, some have a well-developed and mature image. Despite the differences in stages of the project, there seems to be a concentration in specific geographical areas. The five targeted cities are: Turin, Milan, Rome, Bologna and Florence.

In Rome, The Student Hotel planned to build two other additional structures by the end of ****. Milan is in the gunshot of Collegiate, whose bigger picture includes a development of *,*** bedrooms on Italian ground, being the first project to open a ***-bedroom residence.

5.1 Student housing regulation

In order to build a student residency, the following criteria must be respected:

Environmental compatibility

Limits on of gas, electricity and water usage Impact on environment of construction and feasibility of structure Usage of renewable materials

Integration of the structure within the city

Location of structure has to be complementary and compatible with city outlook and real estate facilities

Space requirements

Distinction between single rooms and common areas Minimum height and space of the spaces (***)

Maintenance requirements

Specifics on durability, substitutability of materials or components, etc. 

6.1 Segmentation

• Campus X
• Camplus
• Studentato San Bartolomeo
• Sant’Anna Pisa colleges
• Socrates
• I Praticelli
• Collegio Einaudi
• IPE