Investors are turning to alternative investments in 2024, as properties such as student accommodation and data centres offer returns that outperform other property categories. Luke Dawson, head of Global and EMEA Capital Markets at Colliers, made this assessment of the market, both in Greece and in foreign markets, in a presentation he gave a few days ago at the multinational company's offices in Athens.
"Alternative assets will attract more market attention this year. These are relatively early-stage sectors and often involve real estate operations. In Greece, the supply of student accommodation is very low and here lies a great opportunity for investors," Dawson stressed. He went on to address the challenges of this sector, including the low number of international students and the need to offer student accommodation that suits all budgets.
"There are some important factors that matter here. The investment has to be located close to a university and that is not always easy. There also needs to be different models of student accommodation that reflect the affordability of students," Dawson stressed. The healthcare sector is also expected to attract strong interest this year, he added, citing increased investment in nursing homes in Spain.
The 800,000 students
In Greece, the number of foreign students is small and stands at around 40,000 (mainly due to the Erasmus programme) while in Britain and Spain it is 680,000 and 180,000 respectively. However, the needs of Greek students are also enormous. According to market data, during the academic year 2020/2021, 800,000 students enrolled in Greek universities, of which 680,000 in undergraduate and 120,000 in postgraduate programmes.
The student residences of state universities cover the housing needs of about 5% of students, while the rest are forced to either stay in the family residence, or claim an apartment in a strongly rising market. It is recalled that rent increases in apartments near universities are particularly steep. In its report on student housing, Geoaxis records an average annual increase in rental prices of 18.7%, and compared to ten years ago, when the record began, there is a cumulative increase of 62%.
Investment options in student accommodation are now among the most resilient in the market. In Spain they are among the top preferences of foreign investors while in the UK it is estimated that long-term returns are the second highest in the property market (at around 8-9%) following industrial-logistics which is at the top with returns of 13% over the next decade, according to MSCI data. "The sector has outperformed office, retail and other residential over the past three, five and 10 years," according to MSCI.
Projects in Greece are increasing
Although new investments in student housing have been announced, many projects are yet to be completed. Two student residences by DKG in Moschato and Daphne are expected to be completed in 2025, while Premia Properties has five similar properties in its portfolio with the aim of developing student housing in Greece comparable to those successfully operating in many other European countries, according to Konstantinos Markazos, CEO of Premia Properties.
Other companies vying for a share of the emerging market include Intrakat, Israel's Zoia and Prodea.
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