University campuses, Italy leads the way with 100,000 beds by 2027

"In Italy," explains Mario Breglia, president of Scenari Immobiliari, "the student housing sector is proving to be a strongly evolving asset class with high investment potential and geographic diversification. Moreover, the current gap between the existing supply and the growing demand for university housing is creating a great opportunity for real estate investors. The attractiveness of the sector is confirmed by the increasing number of developers, players and market participants. In particular, pipeline student halls of residence are characterised by an investor structure with different players involved, mostly real estate funds or foreign investment companies'.

"Interest in the out-of-town student housing business," says Francesca Zirnstein, managing director of Scenari Immobiliari, "is growing and now occupies a significant slice of investments in the residential sector, amounting to approximately 45 per cent. Student housing represents one of the main alternative investment asset classes in real estate and is able to offer very attractive returns, thanks to steadily increasing demand. A further incentive to invest in student housing comes from the National Plan for Recovery and Resilience (NRPR), which represents an excellent opportunity for private actors and a test case for the real estate industry's ability to cooperate and to verify the quality of those who manage residences'.

The real estate activity expected in the coming years will be developed, according to the Report, in the main university centres in the north: Milan, Turin, Padua and Bologna confirm their primary role while Rome and Florence become more important.

"The expected developments will return a non-homogeneous geography of university student residences since more than 75 per cent of the beds will be developed in northern regions, less than 5 per cent in southern Italy and the remaining share, about 20 per cent, in the regions of central Italy," specify Scenari Immobiliari.

It is interesting to note, in addition to the cities mentioned above, the interest in secondary capitals such as Aosta, Bolzano and Bergamo, at the same time highlighting the need to expand the consolidated territories by expanding the municipal perimeter towards provincial urban contexts such as Sesto San Giovanni and Novate Milanese.

This uneven distribution of beds in pipelines will increase the gap between the universities in the North and those in the South, affecting the significant drop in enrolment in universities in the South whose bed occupancy rate is below the national average (8.8 per cent).

With investments amounting to around €210 million in the last quarter of 2023, of which just over €180 million was located in Milan (it had been €130 million in the previous quarter), and a total volume of €700 million (or around 11% of the total), residential asset classes continue to be catalysts of interest for investors, operators and developers of private equity funds operating in the domestic real estate market, especially for the Build to Rent (BtR), Build to Sell (BtS) and student housing segments.

Contemporary living issues and new needs related to the theme of housing also support investors' interest in accommodation for off-campus students, the heterogeneity of the demand for which has led investments to reach €315 million, representing 45% of the total volumes referred to the residential sector. More than 70% of the capital invested in student accommodation is of foreign origin.

"The interest in the sector is confirmed by the growth in the number of operators and the heterogeneity of the investors involved: student housing and expected returns are necessary tools to make a real estate portfolio balanced, especially thanks to the consolidation, especially at the local level, of the fundamentals in terms of both current and future demand _ explains the Report _. Italy is following what has already been consolidated in other European countries: branding and the reliability of institutional players play a fundamental role in structuring and training the various stakeholders, both on the institutional side and, as far as the end user is concerned, the correlation and growth derived from the hospitality sector, real multipliers for the student sector. Off-campus student accommodation is, to all intents and purposes, a real estate infrastructure, the current picture shows an extremely heterogeneous territorial coverage of beds, confirming the different speeds of growth and adaptation on the Italian territory".

"The Re.Uni association is fully aware that the market for university residences is experiencing a moment of great ferment and interest, also internationally. We therefore think that it is necessary to deploy the resources of specialised, competent and student-oriented managers to best meet this real need for beds, also thanks to an accomplished collaboration between private and public entities," states Maurizio Carvelli, President of Re.Uni. "We have chosen to publicly launch the association through research because incorrect data is often presented on the sector, especially on costs and beds, and we believe it is essential to work starting from real data because this is the only way we can do good for students and their right to study. It is precisely on this that our work will focus in the coming years because only with a real reform of the law on the right to study can we guarantee more beds and thus also more competitive prices that meet the needs of all students and their families. Our twofold objective is both to expand the membership of the association, which today consists of the founding members Camplus, Campus x, Joivy, and the first new associate, bedstudent, and to dialogue with investors, public bodies, and the Ministry to guarantee the university system a student-housing market that is up to the task," Carvelli points out.

Over the past year, rents in cities with a strong university vocation such as Bari, Bologna, Brescia, Ferrara, Florence, Lecce, Milan, Naples, Padua, Palermo, Pavia, Rome, Turin and Venice have recorded positive changes: renting a room costs on average 12% more than in the past 12 months, while rents in semi-central areas have risen by just under five per cent.

Bari is the city with the highest variation, above 30%, Lecce, Brescia and Bologna perform above average, reporting increases of between 15 and 13%, while Padua, Florence and Milan increase by smaller percentages, confirming the maturity of the market itself. On the other hand, the increase in rents on the free market is more homogeneous with respect to the 14 capitals identified, with the cities of Palermo and Ferrara standing out, which, in the last year, report interesting increases in terms of enrolled and matriculated students on university courses.

To rent a single room in the university quarters of Milan the outlay required is on average 10,000 euro per year, corresponding to about 340 euro/sq m/year (or 860 euro/room/month), for the Missori area the demand goes up to 1,000 euro/room/month. The second highest rent city is Venice with 260 euro/sqm/year (650 euro/room/month). In these two cities the rent for a single room is about 45% (for Milan) and 18% (for Venice) higher than what is demanded on the free market, the increase in the last five years is 18% and 17% respectively.

In Italy, the supply of institutional housing for university students, i.e. residences in agreement with the regional bodies for the Right to Study (Dsu), and residences at the Colleges of Merit Universities (Ccum), sees a larger component in the beds offered by the Dsu, which provide services to students through specific regional funds. Of the 49,000 beds in student halls of residence throughout the country, those provided by Dsu are about 44,000, almost 90% of the total offer, to which must be added the just over 5,000 beds at the Colleges of Merit (Ccum). In relation to the number of out-of-town students, the coverage of beds offered by the structured world stands at 7.3 per cent. Among the cities of northern Italy, Pavia shows a much higher than average supply, but still below the benchmark considered adequate, Turin shows levels slightly above the national figure, while cities such as Padua, Milan and Bologna confirm their attractiveness in the face of a still inadequate real estate activity linked to the social sphere.