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Copenhagen student housing portfolio sold

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On behalf of a foreign investor, Colliers has just brokered the sale of two properties with 184 student housing units in total. The properties were sold to two different domestic providers of investment projects and property funds targeting private investors.

“Student housing continues to whet investor appetite as the Copenhagen market for student housing is characterised by strong demand and uptrending rental prices. In a historical context, student housing properties have traded at higher yields than other residential properties, but the spread has now narrowed to 0-25 bps. This largely indicates that the segment is attracting the interest of a wider circle of investors,” states Jacob Bruun Borring, Manager, Capital Markets, Colliers.

The student housing market is transforming

“We foresee continued substantial transformation of the student housing market. The supply of student housing is going to increase in the years ahead, all the while that the student count is levelling off. In addition, the enrolment requirement has been abolished, which presents investors with added possibilities. For instance, they may decide to let units to singles or new graduates, not only students. Overall, we predict a change in the competitive environment, with location becoming an even weightier parameter than today,” says Jacob Bruun Borring.

The figure below shows that the number of Greater Copenhagen students has levelled off in recent years, while the supply of student housing has increased. We do not consider this a problem however as supply has only picked up over the last couple of years. In fact, a historical shortage of student housing has forced many young people to still live at home with their parents. It has also made many young people take up residence in large-sized flats, sharing with flatmates, as this was the only other option. However, we are convinced that in the longer term the very increase in supply will not only make it easier for students to obtain student accommodation, but it will also make them slightly more selective in terms of its location.

Supply and demand balance student housing in Greater Copenhagen

Good locations

Both of the just traded properties benefit from a good location and therefore have a competitive edge in the future student housing market. 

Teglholmsgade 36 is a newly constructed and efficient property in close proximity of the future metro line to the district of Sydhavn (south harbour), Aalborg University’s Copenhagen branch and the attractive waterfront areas at Teglholmen.

Søndre Fasanvej 90 is a former nursing home, in 2016 converted into student housing. Resident students can shop on the ground floor and avail themselves of fitness facilities on another floor. In addition, the property is located close to Valby with its cafés and shops as well as multiple educational institutions at Frederiksberg.

Transactions in the time of corona

“This transaction proves that it is possible to close deals even in the time of corona. Both investment demand and liquidity still exist in the market, and although some investors are somewhat hesitant, we also see investors that are both active and ready to do business,” says Peter Winther, CEO, Colliers.
“This being said, we are still some way from a regular functioning market, and we are not going to see more normalised activity until society, and not least borders, reopen on a larger scale,” says Peter Winther. 

In Denmark, student housing is only rarely concentrated on campus or next to the grounds and buildings of a university, college or school. Instead, students can rent a room either in a student hall of residence (“kollegium”) or in a privately owned house or flat. Some students share a privately rented flat. Alternatively, students may rent a room or flat in student housing complexes, owned by a property investor, e.g. a pension fund. In Copenhagen, the waiting lists for student hall rooms (which are typically the least expensive) are administered by KKIK (Student and Youth Accommodation Office Copenhagen) and CIU (Centralindstillingsudvalget).


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Peter Winther

Executive Director | Partner | MRICS

Copenhagen

Peter is Executive Director and heads Colliers’ Danish Investment & Capital Markets teams. Peter provides strategic property consultancy services and facilitates the sale of commercial and investment properties, including hotels and shopping centres, as well as property portfolios and companies.

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