2013 The Class Trend Report

Edition 2013

THE CLASS OF 2020

The Next European Renaissance Investment Special: European Student Housing goes Mainstream Power Brokers: Money is not the Issue Insider reports from around Europe, Brazil and America Is International Higher Education driving Europe’s recovery?

Your Next Challenge: How to meet tomorrow’s student demands The Rise of the University City1 A competitive world: student talent and dollar worth fighting for

The Class of 2020 is supported by institutional partners, investors, student housing providers, and media partners. Please join us in 2014!

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The Class of 2020 is an Amsterdam-based non-profit foundation established with a simple goal: to further the professionalism and knowledge of student housing in Europe and beyond. We sponsor research and organize events such as lectures, workshops and an annual conference. In an annual publication we publish the latest trends and market developments. Increase your expertise, broaden your 2 network and meet the leading players of the industry by supporting the Class of 2020 as a partner, supporter, sponsor or friend.

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BACK TO CLASS Editorial This year’s conference is our 3rd and we have come a long way.

We are widening our focus, and are now looking at the European student market in a global perspective, as we see the growth of international higher education accelerate. All students are part of a global story, and it is important we understand all the different stories in order to create housing that works.

One other important reason why we are expanding the focus of The Class of 2020 outwards rather than inwards is to expand the exchange of ideas and knowledge. There are so many ways to provide student housing and if we are to improve our local situation, we should look at how others are doing it and learn from them. We see that cities such as Amsterdam are leading trade delegations to Asia and South America, led by the mayor, with local universities and housing companies, to increase the flow of students back and forth. With these types of initiatives happening (and there are many more examples) we cannot afford to only look at our own back yard when discussing the future of student housing.

What is fundamental for The Class of 2020 is that it is independent and that everything we do and organise is with the mantra “How can we improve the situation for students in the future?”

In the upcoming years we hope to expand The Class of 2020 to include data on operating systems, investment performance and how to build energy efficient student rooms. We are always looking for partners to contribute data and research and join the growing team. With your continued support we can create an independent platform which opens the lid on what works and doesn’t work for successful student housing. We look to establish an international board and we invite anyone that feels compelled to contribute to contact us. Together we can really improve the market for the advantage of every student in the future.

Frank Uffen Co-founder The Class of 2020

This year we have more European and international participants and contributors than ever. The Class of 2020 is now the largest European student housing platform that is open to anyone and everyone, and it is growing. There are some serious movers and shakers and policy makers joining the conference. We are broadening our view on students by positioning it, correctly, as part of the youth travel and education sector. We have banks and investors, universities and housing companies, policy makers and researchers. We have all aspects of the sector attending, from institutional fund managers right down to furniture and ICT providers.

Themes of the 2013 edition In this publication we explore how higher education and student housing can be a catalyst for a new European Renaissance. Our university cities are attracting growing numbers of international students. If we invest smartly we can provide new opportunities for our underemployed youth and retain the global talent our regional economies need in order to compete. A special investment section shows opportunities across continental Europe. Investors and operators are ready to support our university cities with world-class student housing. However, lack of transparency and outdated rules remain barriers to entry.

This is one of the reasons we have partnered with IPD to create a roadmap to a European student housing investment performance benchmark. And finally, in the section The Student Experience we try to learn more about what drives students, how they make their decisions on education, travel and housing.

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TABLE OF CONTENTS 4 6 10 13 14 20 24

MOBILITY, MOBILITY, MOBILITY Andrea Gerosa on the future of Europe’s youth HIGHER EDUCATION TAKES OFF Competition and digitalisation are reshaping the European university BOLOGNA PROCESS IS THE EURO OF HIGHER EDUCATION International students spur growth in European education markets THE RENAISSANCE OF THE COLLECTIVE DOMAIN Rudy Stroink predicts the end of the dominance of the public domain TALENT IS THE NEW MANTRA University cities discover need to attract and retain young people WHEN THE CAMPUS BECOMES THE CITY From islands to networks of knowledge THE STUDENT DOLLAR IS WORTH FIGHTING FOR A look at national marketing campaigns to attract students

THE STUDENT EXPERIENCE

27 28 30 35 36

THE RISE OF THE UNIVERSITY CITY

THE RESURGENCE OF LEARNING COMMUNITIES Patricia Martinez reports from the US TRAVEL TO LEARN, NOT TO ESCAPE Education at the heart of the youth travel boom THE STUDENT’S CHOICE Experts reflect on how students choose their international academic careers TECHNOLOGY BUILDS STUDENT COMMUNITIES The student experience is enhanced by online platforms GENERATION Y WANT IT ALL NOW! How to meet the expectations of today’s students

INVESTMENT SPECIAL 39 40 40 41 41 43 44 48 58 61

Emerging asset class Global capital gravitates towards student housing INREV CEO warns against herd behaviour Bouwfonds IM launches new student resi fund Heavyweight investors get on board Student submarket en route to graduation Power brokers: money is not the issue COUNTRY REPORTS: exploring Europe’s emerging markets Germany, Austria, The Netherlands, Italy, Spain, France, Belgium MUTUAL BENEFITS DRIVE HOUSING PARTNERSHIPS Partnership models between universities and student housing providers THE CHARM OF THE SMALL

18 47

LETTERS & INTERVIEWS

55 60 62 63 64

STUDENT HOUSING GOES MAINSTREAM

LETTER FROM ITALY Stefano lo Rosso: University development means ‘the city of opportunities’ INTERVIEW: becoming a local business in each market Knightsbridge Student Housing about their international plans INTERVIEW: Spanish market becoming more competitive Melon District growing in and outside of Spain LETTER FROM SWEDEN Martin Johansson about building affordable student housing LETTER FROM HOLLAND Charlie MacGregor on the birth of The Class of 2020 THE CLASS OF 2014: taking it to the next level LETTER FROM BRAZIL Juliano Antunes reports from a Brazilian perspective

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The European renaissance: The rise of the university city The word ‘crisis’ continues to dominate the European mindset. Europe’s Generation Y is struggling to find the hope, opportunities and jobs that previous generations enjoyed. For no good reason, say a number of experts and reports. A second European Renaissance is possible if we endorse the dynamics of international higher education and transform our regional economies into global networks of knowledge and innovation. Europe is gearing up to leverage its unique higher education tradition and quality of life. Explore with us the incredible growth of international student mobility and the current drivers of higher education. And see how university cities, investors and student housing providers can team up to generate the economic growth and social mobility this and future generations both need and deserve.

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MOBILITY, MOBILITY, MOBILITY

by Andrea Gerosa Europe is stuck. It’s blocked and stagnant. Stagnation is not just implied in that fatal word that we’ve been hearing everyday since 2009: crisis.

And these numbers seems to be confirmed by another survey of ex-participants of the Erasmus Mundus exchange programme: “54% of respondents state that their Erasmus stay was helpful finding a first job and 39% state a positive impact on their work tasks”.

Stagnation in Europe is, unfortunately, more the result of a depressed mentality. This is a vicious circle that started with the crisis, continued with the lack of opportunities and has resulted in paralysis.

The studies, and also common sense, paint a clear picture: young people who have experience abroad are more likely to be employed, start companies (which create jobs) and thus help the growth of a country.

Needless to say, once more the most endangered by this situation are young people. Previous generations saw their living conditions improving each year, but for the current generation - the so-called ‘digital natives’ - the outlook is not so positive. They are the first generation with negative future expectations, with the almost certainty of depending upon their families.

It is not only this generation ‘on the move’ that is telling us to support mobility, it is also the current economic situation that is urging us to embrace mobility.

The scariest is that these ‘digital natives’ face the prospect of being the first European generation to leave to their children a worse economic situation than the one in which they (we) have lived.

I was born on the cusp. My older sister is ‘Generation X’, while my younger brother is a fully-fledged ‘digital native’ That makes me a kind of bridge between the two.

Europe desperately needs to pull out of stagnation. Young Europeans desperately love to move. Supporting youth mobility is a win-win situation. Let’s do it.

Let’s move it!

Andrea Gerosa is chief thinker at Think Young,

Make no mistake, we have no intention of blaming the ones who came before us. Nor of giving up that easily on our future.

We have all the intention to fight back. Stagnation is not in our nature.

Growing up with the Internet, social media and mobile phones, we are also very much aware of the importance of bikes to living in a carbon-savvy environment. There is one word that describes this generation: mobility. We simply cannot stand still.

But these are just words. Let’s have a look at few numbers.

“Regarding employability, the general trend reveals that Erasmus Mundus (student exchange programme) graduates show relatively low unemployment rates and are on the whole employed shortly after graduation. Only 18% of the EM graduates, who are now employed, stayed unemployed for six months or more after graduation”, reveals a graduate impact survey by the Erasmus Mundus Alumni Association.

From the same survey: “Of the 66% Erasmus Mundus graduates who got a job, 41% found their job already during their studies or within one month after graduation. Only 13% of the graduates needed longer than six months to find an occupation.”

5 Andrea Gerosa

HIGHER EDUCATION TAKES OFF COMPETITION AND DIGITALISATION ARE RESHAPING THE EUROPEAN UNIVERSITY Rapid change is shaking the European university model: online education platforms, rankings, increased competition and an open European market. These are all forcing universities to challenge old practices, build new leadership and form new partnerships.

Global networks and university brands are emerging. Will universities follow the airline industry and consolidate into strategic alliances? Will online education increase or decrease student mobility? Student housing demand is driven by higher education trends, argues Wouter Onclin. Investors in student housing better take note.

Growth Between 2000 and 2010, global participation rates in tertiary education grew from 19% to 29%. More students than ever are attending universities and colleges. It’s in Asia that the biggest changes are taking place. Over the past 20 years, the share of students who went on to graduate with a higher education degree in China has grown from 5% to almost 30%.

This is expected to rise to 40% in 2020, bringing it close to the OECD average. In South Korea the enrolment rate in higher education has reached 100%. Chinese students account for 19% of all International students worldwide. It’s the young, and increasingly affluent population of Asia driving this surge.

And this growth is relevant to all universities and housing providers, everywhere.

Global education groups Similar to the airline industry, we see global strategic alliances emerge. Study Group and Cambridge Education Group are examples of emerging global education networks.

These groups are specialised in international marketing and acquisition of students, stimulating student mobility within their client networks. The University of Amsterdam has partnered with the Cambridge Education Group.

Together they are hosting the Amsterdam Foundation Campus, preparing international students for studies at the Department of Economics and Management at the University of Amsterdam. Cambridge Education Group runs the programme, and recruits students through its international network.

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But it isn’t just in Asia. Throughout the world student numbers are on the rise. In Latin America, the figures are almost as high as those in Asia, and even back in Europe, participation in higher education is increasing, actively being stimulated through government policy.

Pluralisation Numbers are increasing, but so is the complexity of global education patterns. The US and Western Europe still dominate, now being joined by institutions in Asia and Latin America. The output of English language research papers from Chinese universities has grown by 17% per year since the year 2000, now surpassing that of the Japanese. The lingua franca for higher education and research throughout Europe has become English. The world of academics is now truly becoming global.

These developments also shake up patterns in the mobility of international students. Traditionally, we’ve seen students from Latin America, Asia or Africa, going to the West (usually the US or the UK) for their education. But patterns are becoming more complex. Europe has been the number one destination for international study for a long time, but Asia is seeing the fastest growth and is increasingly hosting students from the US and Western Europe.

Mobile universities Not only students are becoming more mobile, universities are as well. In order to meet the needs of their students, a growing number of universities are opening up branches abroad. This means students can get a degree at an international school without leaving their home country.

One example of this is in Doha, Qatar. Education City hosts not only local Qatari schools, but also branches from Texas A&M, Weill Cornell Medical College, HEC Paris, Stenden University, among others (mostly from the US). Qatar wants to be a knowledge and research hub for the region. The Qatar Foundation is investing heavily in education, preparing for a world post-oil.

There are many other examples of this broad development.

US and UK branches are leading the way with a dozen or so foreign universities throughout Asia already. And it goes in both directions. Last year, Ningbo University announced they are opening a campus branch in Florence, Italy.

Although often on a small scale, these campuses, do represent a development toward more global integration. For students, it is a way to get international experience, without actually going international. Costs play a major role in this. Tuition fees and living expenses while abroad remain a barrier for many. But an American university, for example, can offer Chinese students their programmes at much lower cost when they are located in China.

“The number of students around the globe enrolled in higher education is forecast to double to 262 million by 2025” OECD

“When the outstanding becomes so easily accessible, average is over” Thomas Friedman, New York Times, about MOOCs

“I believe in a convergence of public and private providers over the next years. This convergence can drive, in a sustainable way, the globalisation of higher education and the shaping of responsible global citizens”

“The university system in Europe is at least as determining for Europe’s future as the banking system. We too are too important to fail” Dirk Jan van den Berg, President of the Executive Board of Delft University, The Netherlands

“The value of international higher education will grow from US$72 billion today, to US$132 billion in 2020” Samuel Vetrak, StudentMarketing

Maurits van Rooijen, CEO and Rector, London School of Business and Finance

“The number of students seeking study abroad is estimated rise to 8 million, up from 4 million in 2010, with OECD countries capturing 80% of international student enrolment” OECD

“Universities need to be free to develop their own distinctive missions and decide on issues like staffing.

How else could we expect them to keep pace in a rapidly changing world?”

Máire Geoghegan-Quinn, European Commissioner for Research, Innovation and Science

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TOP DESTINATION MARKETS TOP of DESTINATIONS Number international tertiary students (2010) & % change (2006/2010)

NUMBER OF INTERNATIONAL TERTIARY STUDENTS (2010) & % CHANGE (2006/2010)

684,714

389,958

271,231

259,935

200,862 141,599

17%

18%

31%

5%

Source: UNESCO Institute Source: UNESCO Institute of Statistics, 2012of

-23%

9%

129,690

67%

95,590

27%

71,673

69,905

97%

42%

Statistics, 2012

The US is still the largest destination for international students, but its share of total international students declined in the past years. In the top three destination countries, it’s Australia that is showing the fastest growth. But China is becoming more popular as a destination as well.

Coming & Going TOP SOURCE MARKETS Number international tertiary students (2010) & % change (2006/2010) TOP ofSOURCE MARKETS

NUMBER OF INTERNATIONAL TERTIARY STUDENTS (2010) & % CHANGE (2006/2010)

562,889

200,621 126,447 103,110 54,407

35%

44%

24%

46%

Source: UNESCO Institute Source: UNESCO Institute of Statistics, 2012of

1%

53,884

19%

51,565

7%

49,585

21%

49,116

41%

47,979

207%

Statistics, 2012

China is by far the largest supplier of international students in the world. 19% of all international students are from China. Its dominant position is growing, together with other Asian nations.

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Hans de Wit, Professor (Lector) of Internationalisation of Higher Education at the School of Economics and Management of the Hogeschool van Amsterdam, notes the increasing importance of cost in study decisions. Students are making critical choices about whether it is worth moving or not. The cost factor for many of tomorrow’s students is real and the importance of online education will increase.

Transparency The movement of national education systems towards a global education field means increased compatibility and comparability between university programmes. As Europe adopts the Anglo-Saxon model of higher education (with Bachelor, Master, and Doctorate degrees), other parts of the world are doing the same. There is now a global standard for the organisation of degrees, and thus they can be translated and compared.

Transparency creates options, not only for students, but for researchers and funding too. Universities are finding themselves in an increasingly competitive environment. The competition is not only about attracting students and staff, it is about the ability to attract funding as well. It is no longer ok to be ‘ok’ - universities must be excellent. Excellence costs money, and public funds are limited.

Rankings and competition Comparisons often take the form of rankings. In North America and in the UK, rankings have been common for decades but in continental Europe they are a recent phenomenon. Suddenly, universities are finding themselves on a list along with hundreds of competitors. A university such as the University of Groningen has been a regional knowledge centre for many years. It has produced much serious academic work and numerous good scientists from a student base traditionally pooled from the region surrounding this college town. With increased international transparency its scope is changing. The university is now ranked 89th on The Times Higher Education Ranking, and number 92 on the ARWU, which is published annually by the Shanghai Jiao Tong University. This is quite a switch - from recruiting students in Winschoten to enticing them from Shanghai.

(MOOC) is a fairly new, but rapidly developing phenomenon.

It was started by colleges in North America offering courses online, and has since become a term with a lot of swirl in the education industry. Some call it a hype, others predict MOOCs will bring about the end of education as we know it.

The first MOOC was a course called ‘Connectivism and Connective Knowledge’, given to 25 students at the University of Manitoba (Canada) in 2008, Over 2,200 joined in from the general public; online and free of charge. In 2011, Standford University offered a series of courses, each with an enrolment of around 100,000. This truly solidifies the M in MOOC. Dozens of universities are following suit. Courses are accessible through web platforms, such as Coursera.org, which offers over 435 on-line courses from 88 universities. There are almost 5 million students registered on their site alone.

It is not yet clear where MOOCs will go. Their business model is still under development. What kind of traction they will get?

And just how is this going to affect education as a whole? Most courses are being offered free of charge, but there is a fee if you require certification. In some cases, these certifications can be transferred as credit for part of a degree course, and so actually replace a physical course. Other sources of income for MOOC platforms include offering access to student data for paying companies who wish to recruit the most talented students.

These developments could be game changers. There is nothing stopping a student in Ghana from attending a MOOC course at Harvard. And there is nothing stopping this student from being recruited by a company just about anywhere in the world.

Is this really what the future of education is going to look like? It remains uncertain for now, but things are changing, and they are changing fast. More complex patterns, more transparency, more competition, more online access. It is all leading to one thing: more education. The world is certainly becoming a smarter place. Student housing providers should take note to fully understand where students will go.

Prospective students get their information from the Internet, a major driving factor in the increase of transparency. But when more information is available, it is hard to see the forest through the trees. Internet start-up companies have been jumping into this market. In Europe, StudyPortals has organised the majority of available study programmes in a user-friendly database. You want an MA degree in accounting in Finland? Here- these are the schools in Finland that are offering that option! Studyportals.eu has over 2.5 million visitors per month, and is growing quickly.

MOOCs The Internet is not only a place where you can find your school of choice; it is also a place where more and more people can actually attend school. Massive Online Open Courses

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BOLOGNA PROCESS IS THE EURO OF HIGHER EDUCATION INTERNATIONAL STUDENTS SPUR GROWTH IN EUROPEAN EDUCATION MARKETS

Europe is leading when it comes to attracting international students. The number of international students in Europe has doubled since 2000 to over two million. Asia’s share of student numbers is expected to rise from 27% today to 70% in 2025. Many of them are looking to travel and study in Europe. No wonder that the European Commission intends to promote the EU as a study and research destination for top talent from around the world.

of international students worldwide are now from China, and many of them come to Europe. Their mobility rate is on the rise. Attracting international students has become a goal of universities, cities and countries. In OECD nations, it is estimated that about 25% of international students stay in their elected country of study after graduation. These highly educated newcomers bring much added value to the economy, particularly in places where the population is aging and where there is a real need for knowledge workers.

Increased student mobility within Europe is cited as responsible for the growth of international student numbers.

This is partly due to the Bologna Process (see next page) and the increase in sheer volume of education programmes being offered in English (see next page). But special attention must be paid to the growing number of Asian students. 19%

But the differences in education culture between countries, the height of language barriers, and the difficulty of visas and legal restrictions seem to be on the wane. In the competition for global talent, everyone wants to be a winner. Knowledge is truly becoming global and mobile.

Patterns of international student mobility are rooted in tradition. Ties of culture and language are important determinants in student flow. North African students tend to select France as their destination of choice. Students from Latin America favour Spain, and even the number of Indonesian students in The Netherlands is relatively high.

SHARE AND INTERNATIONAL ShareGROWTH and growth OF of international students STUDENTS 160%

Australia United Kingdom

140%

Switzerland

ES

New Zealand Austria

120%

% Change 2005 - 2011

France

AT

100%

Netherlands

FI NL

80%

60%

Germany Italy

UK

Spain Belgium

IT

CH

Sweden

AUS

Finland

40%

SE 20%

BE

10

0% 0%

5%

FR DE

10%

NZ 15%

20%

% International students per country, 2011 Source: OECD

25%

Australia has the highest percentage of international students of all OECD countries, but Spain saw the fastest growth between 2005 and 2011.

“The growth in number “Two-thirds of of international students all international from European countries students in Europe was slower than that of are concentrated international students in in the UK, Germany Europe. This means Europe and France” has attracted a larger share from non-European Prof. Hans de Wit, Hogeschool van Amsterdam countries, particularly from Asia” “672,786 European Prof. Hans de Wit, Hogeschool van Amsterdam students were studying abroad in 2010, about 85% “The Erasmus of them chose another Programme is still European country as their Europe’s most destination” popular exchange Prof. Dr. Urlich Teichler, University of Kassel programme.

Around 200,000 Erasmus students study abroad “International student mobility annually” contributes €740 million of Dutch tax revenue each year” Erasmus Mundus Netherlands Bureau for Economic Policy Analysis (CPB)

“Attracting the best students, academics and researchers from outside the EU, and developing new forms of cross-border cooperation are key drivers of quality. The Commission intends to promote the EU as a study and research destination for top talent from around the world” European Commission

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57% 73%

urope

ceania

09

2009 2010 2011 Language matters Language is still a strong determinant. Countries with a North America language widely spoken throughout the world have an advantage, and that is reflected in the numbers. Students from South America are dominant in Spain. French universities attract students from its former colonies, and more than half the international students in the Netherlands are German, for whom Dutch is close to Deutsch.

2010 2011

But the main winners in this league are the English-speaking nations. The US, the UK and Australia are the top three North America of international students. Countries with smaller 2010 recipients 2011 language bases are now switching much of their research and increasingly their higher education to English. This is not only to make it easier for international students, but also to be part ca of the international world of science. How many can read your paper on an advanced specialised topic when it is written in Hungarian?

Studyportals.eu has almost 23,000 English language study programmes in their database throughout Europe to date.

The Institute of International Education note an increase of English language programmes of 42% since 2011.

Rest of the world

Global share of higher education GLOBAL SHARE OF INTERNATIONAL students 2011 HIGHER EDUCATION STUDENTS 2000 27% 43% Global share of 57% higher education 73% students 2025

27% 43% 70%

INTERNATIONAL STUDENT FLOWS WITHIN THE EU Germans the top three of student flows flows TOP 5 dominate international student between EU countries. within the EU

TO

FROM 1

Germany

Netherlands

29,952

2

Germany

Austria

27,729

3

Germany

UK

25,458

4

France

UK

20,768

5

Italy

UK

11,389

Source: OECD Source: OECD

TOP 5

STUDENT FLOWS INTO THE EU

Asian students form the largest flows into the EU, but linguistic relations between countries are responsible for the numbers 2 and 5.

TOP 5 student flows into the EU TO

FROM 1

Asia

UK

347,703

2

Africa

France

114,795

3

Asia

Germany

85,658

4

Asia

France

58,470

5

Latin America

Spain

56,388

Source: OECD Source: OECD

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Asia

Rest of the wo

Rest of the world

Global share of higher

GLOBAL SHARE OF INTERNATIONAL students HIGHER EDUCATION STUDENTS 2025 202

Global share of higher education students 2025 30%

70%

30%

Source: IDP Education Australia

70%

TOP 5

Asia

57% 30% 73%

Asia

Rest of the wo

The Bologna Process: the Euro of higher education Bologna is for education what the Euro is for the economy. In 1999, 27 countries signed an agreement to harmonise their higher education systems: the Bologna Process. It is a simple idea with great consequences. It is also an idea that has proved to be more successful than its plagued economic cousin the Euro; since its inauguration, 20 more countries have signed up. The Bologna Process has created a European Higher Education Area consisting of 47 countries to date, including places such as Kazakhstan, Turkey and Greenland.

The Bologna Process has some clear goals: • to facilitate student mobility within Europe • to entice talent from outside Europe by making European education more attractive • to provide a broad knowledge base that contributes to the European sense of community • to create greater convergence between the US and Europe as Europe adopts aspects of the American system This means that 47 countries have reformed their higher education systems to meet the standards set at Bologna. The most visible changes are the introduction of: • the European Credit Transfer System (ECTS) • the three-cycle education framework: Bachelor, Master and Doctoral degrees These reforms have made European university programmes comparable and interchangeable. It has made it easier for students in and outside of Europe to choose any of the thousands of programmes on offer within the signatory countries to the Bologna Process.

THE RENAISSANCE OF THE COLLECTIVE DOMAIN

by Rudy Stroink The programme of this congress implies we are at the eve of a second European Renaissance. If this is so, the role of the state must be reinvented. Its ideology is due for an overhaul.

The concept of the modern welfare state emerged 60 years ago in Western Europe. A strong set of public institutions was created at that time to support the goal of a stable postwar society. And with it, the state began the expansion of its involvement into almost every aspect of society over a very short time.

The European public state model has continued to expand, as much due to its successes as to the lack of alternatives. The state now controls many aspects of the economy. It is heavily involved in banking and holds an unprecedented amount of assets. It also dominates the funding of our scientific, educational and cultural infrastructure. All efforts to the contrary, modern state institutions are still steadily growing.

Now, with their own internal logic of existence, they have become almost Byzantine in their complexity.

The dominance of the public arena will end There is good reason to assume, however, that this dominance of the public arena will end. We have recently discovered that the post-war state model is unsustainable. The current economic crisis, which in many ways is also a crisis of the modern state, is demanding a new approach to the

relationship between the private and public domain. This renaissance is as much about dissolution of institutions past their prime as it is about rebirth.

Our current Dutch government is proposing a new society of participation. This reflects the idea that the state is no longer able to take care of us all. We have to start helping ourselves.

Similar discussions in the United States show virulent antistate sentiments and in the United Kingdom and Germany, a conservative mood is flourishing.

Dilemma Our dilemma is this: when it benefits us, we want the security offered by the state, yet we also demand the right to act independently in our economic affairs with as little regulation and public burden as possible. Modern society has become too complex for an economy either fully privatised or state regulated.

Rebirth of the collective domain I foresee a rebirth of the collective domain as an alternative to both state dominance and its counter-form of limited governance offered by liberalism. This model emerged, along with liberalism, in the early stages of the modern industrialistion of western society. Based on ideological, political, religious and other convictions, specific collective interests were defined and organised into ‘platforms’ with a high level of member participation. The members defined common targets such as affordable housing, insurance, education, banking and collective bargaining. Most of these collectives were later incorporated into our welfare state structure. But their origins were in the form of local, bottom-up crowd participation. Our times are even more suited to this.

Current information systems enable us to organise ourselves through easy communication over long distances and with numerous parties. Organisations based on semi-public collective goals would be a perfect fit for individuals who appreciate economic independence, but require the benefit of larger joint undertakings to achieve common aims. The network economy necessitates such specific organisational structures.

And the Class of 2020 is such a collective. The founders are not waiting for the state to pick up the challenge of student housing. They are creating their own collective platform and organising co-production across disciplines and institutions.

The Class is only one example of the birth of many new, mostly local, collective initiatives. A true renaissance of the collective domain.

Rudy Stroink is President of the Urban Land Institute, the Netherlands, and host of The Class of 2020 Conference.

13 Rudy Stroink

TALENT IS THE NEW MANTRA UNIVERSITY CITIES DISCOVER NEED TO ATTRACT AND RETAIN YOUNG PEOPLE Some cities never fail to amaze; the hustle and bustle of London, the skyline of Manhattan, the grace of Paris, the optimism of Shanghai. These global centers of economy are attracting young people and becoming global centers of knowledge at the same time. Increasingly, the battle for talent is being carried out on a global stage. But what comes naturally for some cities requires a little more effort for others. A look at what some cities are doing to stay competitive.

Willem van Winden is a lecturer on Amsterdam Knowledge Economy at the Hogeschool van Amsterdam. He sees many cities developing strategies in order to be part of the global battle for talent. “Cities are increasingly looking for their unique selling point”. Attracting talented people starts with attracting the best students.

Knowledge and energy lead us to recovery Richard Florida is an urban theorist who has done extensive research into what it is that makes some regions more economically successful than others. Recent studies have shown that knowledge is one of the pillars upon which the economic recovery of cities is built. “The list of America’s most productive metropolitan areas is a combination of knowledge centres and the emerging ‘energy belt’. America’s new growth model is taking shape as a ‘knowledge-energy economy’.”

“In Europe, cities are also becoming aware of what knowledge can do for the local economy” Van Winden says. And so the battle for talent is on. People are becoming more mobile, and economies are as well. TNO, a Netherlandsbased organisation for applied sciences, calculated that the knowledge sector contributes €14.5 billion per year to the Dutch economy. This is €25,000 per student, of which an estimated 75% is invested directly into the local economy.

A study in New South Wales, Australia, found that visiting friends and relatives of international students had spent AU$317 million in 2011 in New South Wales alone.

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The people are the economy The nature of economies has changed. Industries and employment used to be tied to the availability of resources.

People would go where the jobs were. But increasingly people themselves are the most valuable resource. Van Winden:

“People do not follow the economy, the economy does not follow the people - the people are the economy. Which means that for cities to strengthen their economies, they need to attract talent”.

University cities Van Winden observes three different types of university cities emerging in the knowledge based economy: 1. Global centres: cities that young people naturally gravitate to. These are the Londons, New Yorks and Shanghais of this world - large metropolitan centres with a lot of economic diversity and opportunities. They benefit from a perfect combination of factors: the size of their economy, their large population base, and the number and quality of their universities. These locations have a reputation that naturally attracts people. They compete globally, but their position as a global centre is seldom challenged.

2. Cities of academic excellence: Cambridge, Oxford, Heidelberg, Leuven, Salamanca, Bologna. These cities attract students from all over the world for their academic reputation, long tradition and well-respected degrees, and will continue to do so. The universities are a large part of the local economy but many of their graduates move on to nearby global centres.

So the challenge for these cities lies in the retention of talent after graduation.

3. Cities that have to do that little bit extra to attract talent: these are places that traditionally have had good universities, but have not come out on the very top of academic rankings.

Nor are they the most bustling of metropolises. Most university cities in Europe are part of this group. They are cities and regions with one or more research universities, an international airport and a well-developed regional economy. They are well equipped to attract and retain student populations but the competition is fierce. There are big differences between cities like Oslo and Bilbao, but what they have in common is that they have to fight in order to win the best students and the latest investments in research and education.

Reinvention and renaissance It is in this third group that the competition is most intense, and the chance of not being a winner most real. But it also presents an incredible opportunity. The economy of knowledge is one of diversity, of creativity, of being able to reinvent oneself. It is here that the European Renaissance has its chance. After the destructive forces of the global economic crisis, a new European generation is emerging that is all of these things: mobile, diverse and creative. They are no longer attached to old conventions and are highly connected.

The people are the economy Willem van Winden

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Different leagues Interestingly, with increasing mobility, the three categories of cities are all playing in the same league. They are all trying to attract from the same pool of people. It is clear that smaller and more remote cities have a harder time keeping up with the major global players.

Seattle-Tacoma, home to Microsoft, Boeing and Amazon; Durham-Chapel Hill, dubbed the Research Triangle. These are the places that are driving the recovery of the US economy.

None of them are global centres, but what they have in common is that they are clusters of knowledge. Education, research and technology are at the core of their economies.

The question is what the future prospects for these smaller regional university cities are. They still attract students, but retention is the big issue. Within Europe, you can see that some regions are experiencing a brain drain more than ever. The universities of Zaragoza and Edinburgh remain very attractive, but after graduation, many take their knowledge elsewhere. It is a challenge for these cities to be centres of exceptional academic excellence, and find a way of strengthening their regional economies.

And the development of this clustering of knowledge and economy is continuing, also in Europe. Van Winden: “Economy is no longer about production. It is about inspiration.” Where people come together, new things sprout and grow. Whether it’s in a high-tech lab in Silicon Valley, or while having a beer with your project team overlooking the Amsterdam canals. Open minds and ideas coming together that is where the new economy thrives.

Then there are other cities, such as Munich, Rome, Madrid, Copenhagen and Amsterdam. Although not true global centres, they remain magnets for people and investment, particularly from their own respective population base. Yet these cities too are having to fight hard in order to attract international students and investments.

Creative strategies Some cities are getting creative, using innovative strategies to attract people. The University of Delft is investing heavily in participation with international networks of universities of academic quality. Linköping University in Sweden has introduced internships for international students, connecting them to the local economy. They are determined to increase their retention rate of international students.

Aachen in Germany has a highly regarded technical university, but students often leave for places with more jobs for technically skilled workers where they can apply their skills. Large German corporations have been invited to open offices on the Aachen campus. 80 companies have done so, and can now use the university’s resources, and thus gain early access to graduating talent.

The City of Amsterdam is investing €50 million in the new Institute for Advanced Metropolitan Solutions, which will be operated by the universities of Delft, Wageningen and MIT. Even though this is relatively small in student and staff numbers, it does further solidify Amsterdam as a place that invests in knowledge, and a place where people and academic institutions want to locate. The Amsterdam region not only hosts the traditional universities, but it is also accommodating new institutes as well.

The economy of inspiration Growth in education is a worldwide phenomenon. And a pattern of global winners is becoming apparent. Each university city is fighting for a place among them, pulling out all stops to enhance the strengths they have.

Richard Florida’s research shows that the top 10 of the most economically productive metropolitan regions in the US feature places like: San Jose, where Silicon Valley is located;

OIL FOR KNOWLEDGE: THE ARABIC PENINSULA GOES ACADEMIC Oil wealth has transformed the Persian Gulf into countries with thriving economies of shiny skyscrapers. In order to improve educational standards, these oil states are investing in new campuses to prepare for an economy post-oil: University College London, Qatar: After forming partnerships with Qatar Foundation and the Qatar Museums Authority, UCL accepted its first intake of 29 Master’s students in August 2012. This year, 39 new students from 25 countries enrolled in Master’s degree programmes in Conservation, Museum Studies and Achaeology.

New York University, Abu Dhabi: NYU Abu Dhabi opened its campus in the UAE capital in 2005. Fully-funded by the Abu Dhabi government, it’s scheduled to move to a bespoke campus on Saadyat Island, the capital’s nascent cultural hub, next year. Its first class of students is expected to graduate in May 2014.

Heriot-Watt University, Dubai: Heriot-Watt welcomed its first students in 2005, becoming the first foreign university to open in Dubai International Academic City. Focusing on Business Studies, Engineering and Construction, the university has 3500 students with 75 full-time academic staff.

Paris-Sorbonne University, Abu Dhabi: Sorbonne started its first classes in Abu Dhabi in temporary accommodation in 2006, and moved into its permanent campus on Al Reem Island in 2009, now accommodating 700 students. Teaching is exclusively done by lecturers from Paris.

The university uses the European Credit Transfer System and is part of the European Education Area (Bologna Process). Its main language of instruction is French.

Source: Financial Times

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Cities build talent strategies THE AMSTERDAM TALENT AGENDA The City of Amsterdam wants to be in the top five of the most attractive European regions to invest in. The city is working with its university and business leaders to focus its economic policy on innovation and knowledge.

In a recent interview with PropertyEU, Mayor Van der Laan explained: “Last year we set up the Amsterdam Economic Board. It is made up of prominent CEOs, scientists and representatives of government agencies advising on the strategic economic development of the region. The board stimulates entrepreneurship and innovation.”

The city is actively on the hunt for talent. Its two main universities are in the Times Higher Education Top 150 universities worldwide, and the city is home to over 100,000 students. Amsterdam has recently announced €50 million support for the Institute for Advanced Metropolitan Solutions (AMS), an education and research centre run by the Universities of Wageningen, TU Delft and the Massachusetts Institute of Technology (MIT). The city has also welcomed a number of new education companies, including Nyenrode New Business School, Study Group’s Holland International Study Centre, Cambridge Education Group and UvA’s Foundation Campus, Think and Knowmads.

Van der Laan: “We are encouraging IT workers to come here: many businesses are struggling with a lack of talented IT staff. At the same time we are stimulating home-grown IT-talent -businesses and training institutes are already working closely together.”

The Amsterdam region has set up the Amsterdam Foreign Investment Office in order to attract investment, and travels around the world to set up networks with universities and businesses. The city also has an expat office, taking care of the needs of foreign talent arriving in Amsterdam for work.

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LETTER FROM ITALY TORINO: UNIVERSITY DEVELOPMENT MEANS THE ‘CITY OF OPPORTUNITIES’

By Stefano Lo Russo After a century of strong development based on manufacturing (mainly in the car industry) Torino is implementing urban renewal on an extraordinary scale.

This is having a parallel impact on development and social cohesion, industrial conversion and socio-economic urban regeneration. In brief: sustainable development.

Torino has successfully diversified its industrial base, with investments in the tertiary sector, culture and quality of life.

The current administration has launched an ambitious plan of action to attract new opportunities to the university for the growth and development of Torino as a university city.

Torino has been transformed into a top-ranking university town. Its institutes, the Politecnico and the Università, are leading in the international rankings and are increasingly attracting foreign students.

Olympic village The relationship between urban space and university sites and facilities has undergone a profound change. The university has become one of the main drivers of urban development and quality of life in the city while the quality and quantity of student housing is progressively improving throughout the metropolitan area. This is also thanks to the 2006 Winter Olympic Games. This provided a number of press and athletes’ village buildings which were converted. It is important to note that it is not just the number but the design of these structures which had to be effectively integrated into the urban space. The surroundings needed to be pleasant but at the same time lively and dynamic. They also had to connect to places of study and research along clear mobility routes.

over several widespread sites over the whole town with an interesting concentration along three major axes: the system of the old city centre, the banks of the Dora in the former Italgas area (for the Humanities) and the length of the River Po (along which the historical buildings of the Scientific Faculties are housed).

Further, several important training centres are located in Torino to complete the knowledge city vocation: the European Training Foundation (ETF), the Staff College of the United Nations, the International Labour Organization (ILO), the International Pole for the Support of Education and Training (IPSET), and ESCP-EAP (European School of Management).

The new University Masterplan has designed a strategy aimed at increasing the attractiveness of Torino through university quality. This has been just approved by the Municipality Cabinet and represents an extraordinary opportunity to achieve this new idea of university student housing within the framework of the urban development. Through the development of the ‘City of Knowledge’, we ambitiously propose Torino as the ‘City of Opportunities’.

Stefano Lo Russo is the Counsellor Cabinet Member for Urban and Strategic Planning, private real estate development and policy coordination on urban renewal projects in the City of Turin, Italy.

Politecnico and Università di Torino are the backbone to Piemonte’s education system with faculties of Engineering, Architecture, Sciences and Humanities. They collectively number 100,000 people (students, researchers and visiting professors) which is around 10% of Torino’s municipal inhabitants. At the moment, more than 7% of university students in Politecnico and Università are international. The overall incoming students in Torino number more than 40,000 (23,000 at Università, 17,000 at Politecnico). Among these, more than 20,000 require student housing. This is a trend that has shown stable growth over the last years.

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Campuses The universities have been working hard to consolidate their attractiveness and integration with urban development. The Politecnico di Torino is concentrated over two locations: the Campus surrounding the historical centre and the new Design Centre in the west section of Fiat’s Mirafiori factory. The Università di Torino, however, has set up strong connectivity Turin, Italy

19 Kristina Reinhard, Cologne, Germany Photography: Henny Boogert

WHEN THE CAMPUS BECOMES THE CITY FROM ISLANDS TO NETWORKS OF KNOWLEDGE Alexandra den Heijer and Burton Hamfelt are passionate about campuses. They both work closely with universities and cities on the challenging task of building a 21st century campus.

What campus issues are most urgent for universities today?

Den Heijer: Historically, universities were always in the city centre. They were an integral part of town, just like the market and the Town Hall. From the 1950s onwards however, there hss been a movement throughout Europe to make space for ever-increasing academic needs on specialised campuses on the periphery of our cities. In true modernist fashion we have divided things up in a rational way, with each sector controlling their own piece of the pie.

But students don’t like having to take a bus to a wind-swept, out-of-town campus. And the way students feel about their campus influences their choice for a place of study.

What we are now seeing is a change in the use of universities, and a change in the way we look at them from the perspective of real estate. Academics are changing too: students migrate from department to department following interdisciplinary courses; professors travel the world, no longer holed up in their offices; students source more relevant information online than in the library. Buildings, offices, libraries, and classrooms are being used differently. These physical places are no longer used as intensively as they used to be.

On the flipside, there are higher demands on the quality of campuses. There is an increasing need for social spaces, yet public funding is decreasing. This means more and more financial pressure is being placed on building resources and on campus management.

Hamfelt: Higher education is indeed changing, and increasingly it is being noticed as a lucrative and growing business sector. Students are on the prowl, and having to make some very strategic decisions about their future career plans - often independent of their country of origin. Universities are discovering their new global influence and are rapidly networking. And industry is keen to sponsor more research in

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order to get ahead in the race for innovation and close the gap between training and the workforce.

Cities want to capitalise on this growing market by forming strategic partnerships with industry and universities. The challenge will be in how multinationals, universities and their host cities work together, as all three have quite distinct cultures and agendas. And how will the host city itself be transformed? Will the university city be transformed into a kind of ‘living laboratory’ focusing on innovation and change?

Will it be a vibrant new creative neighbourhood? Or will it merely play host to a larger internalised corporate-style campus environment?

Why is the traditional campus model not the best solution for these challenges?

Den Heijer: The world has changed and barriers need to be broken down. Departments need to start sharing their spaces and services. We should be making better use of the facilities we have. We shouldn’t be building more barely-used offices, cafeterias that nobody wants to eat in, research labs that only students have access to. It’s the public space between and inside our buildings where people meet and where real innovation happens. This should not be an afterthought, but the focus of designing a campus.

Hamfelt: I agree. A campus should be more than an industrial park for education. The architecture critic for the Boston Globe, Robert Campbell, wrote that universities are the new city planners. If universities want to build, then they need to build whole neighbourhoods. Neighbourhoods that provide jobs, housing, services and facilities for residents who may not even have any connection with academia.

The renowned Harvard urban economist Edward Glaeser has shown that geographic proximity is necessary in creating knowledge and innovation. Teachers and entrepreneurs are the basis for urban rejuvenation as well as the resilience of the economy. All these new networks, exchanges and alliances that are emerging in the university world need new spatial models to re-conceive the campus with its own urbanity.

They need to engage in new forms of city living where the physical and virtual worlds can coincide with each other. This kind of urbanity cannot be created within the confines of the traditional university campus alone.

You advocate the integration of campus and city.

Why is this the way forward?

Hamfelt: On the question of how campuses relate to the city, I would say that they are not only embedded in the fabric, but they are the fabric of the city. We are now seeing more and more learning and research seeking new partners beyond the borders of traditional institutions. They are on the hunt for new types of collaboration that fall outside the preferred disciplinary canon of most university faculties. Innovation and creativity are the new drivers of the current and future economy. Many studies show that dense urban conditions foster innovation and creativity because of the abundance of ‘face-to-face’ contact and sites for interaction. And new combinations of players require new and surprising types of spaces. The question quickly becomes: what can education do for the city? And we need to help institutions with their new role.

Den Heijer: The campus is a city, and the city is a campus. The thing is that this sounds easier than it is. We’re still seeing throughout the world universities building campuses that are islands unto themselves. Even at my own university in Delft!

It’s proving very difficult to change the mindset of the people.

What type of design trends do you see?

Den Heijer: I feel that design has been turned inside out. We used to think just in terms of buildings, and that by clustering them we had a campus. But what we now see is that it’s in the public places between and within buildings where people come together. These are exactly the spaces where networks are created. It’s a learning landscape. Connectivity and interaction are the design objectives of campuses.

Also, there seems to be more emphasis on the quality and user-experience of these kinds of places. Authenticity and a feeling of local embedding is certainly a trend. People want to know that they are in Delft, and not in some bland building that could be anywhere. Making connections, both physically and through design, is important.

University of Leuven, Belgium

Hamfelt: I think we’re seeing two parallel but different developments going on in the campus world. The first being the new design-driven facilities with scale and grandeur to match the international ambitions that the ‘world class’ university aspires to.

At the other end of the spectrum we’re seeing more low-key, quicker and easier types of campus city development. Reusing vacant buildings is essentially bringing the campus into the city. Likewise, the temporary use of urban space intensifies the city, bringing in more dynamic forms of urban life. And this is a new economic business model. Our Research and Design Campus City Project has been investigating the ‘popup shop’ phenomenon. The ‘pop-up university campus’ could accommodate short-term sudden growth spanning periods of months or even years.

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Why does the design of a campus matter in attracting students?

Den Heijer: Studies do show that the atmosphere and student life of a city are almost as important in choosing a study destination as academic reputation. If you take design in a broader sense, you would say it is incredibly important. A place that is unique will attract people - so universities are investing money in making their campuses stand out.

What are your recommendations for the student housing developers of Europe?

Den Heijer: Please consider the re-use of vacant buildings in the city where you want to build. There are so many examples of successfully redeveloped buildings - sometimes older heritage buildings, sometimes vacant office blocks. I feel that there are many more opportunities out there. I understand that these projects might be more complex, and that on paper they are not always financially feasible. But it is becoming harder and harder to justify why building a new complex on the edge of town is better than re-using an existant building which is already part of the fabric of city life.

Hamfelt: My first advice is to innovate. Don’t just build for ‘the student’. Student populations fluctuate too widely, even in the medium term. And from a student perspective, it is more interesting to mix with other ambitious young people, from all walks of life, in all kinds of spaces. Working, exchanging, and meeting up with other young people who may not be students, but ‘start-ups’, or visiting teaching staff, or academic people with children living on housing estates. This brings more variety and more vitality.

TU Delft campus, The Netherlands

Secondly, scale-up your concept. A student village or academic city has more potential for new forms of urban development than just accommodation facilities. Use your creativity and imagination. Find and create cool places for students to live.

Alexandra den Heijer is Associate Professor of Real Estate Management at the Faculty of Architecture, Delft University of Technology (TU Delft).

Burton Hamfelt is an Amsterdam-based architect engaged in researching and designing the spatial impact of education and knowledge economies in the city.

22 Burton Hamfelt

Campus Varaždin, University of Zagreb, Croatia Alexandra den Heijer

“Connectivity and interaction are the design objectives of campuses” Alexandra den Heijer

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THE STUDENT DOLLAR IS WORTH FIGHTING FOR As they discover the economic benefits of international academics, recruitment of international students is the new motto of governments worldwide. Many countries have geared up their marketing campaigns.

Study in France, “pour l’art de vivre en France”. “Be a pioneer, be creative, study in Holland”. “Make your dream a reality in Canada”. “Every new day in the world starts in New Zealand, the natural home for fresh ideas”. The allure of studying abroad splashes off the screen while watching some of the campaigns designed to entice international students.

Advanced economies run on brains. But the populations of many advanced economies are ageing - those brains need to come from somewhere else. As the internationalisation rate in higher education increases, you want to make sure that your country ends up on the right side of the equation: more brain power entering your country than leaving.

A growing number of studies are highlighting the economic benefits of hosting the growing number of international students.

Students pay The Dutch CPB (Netherlands Bureau for Economic Policy Analysis) has concluded that current international student migration contributes €740 million to Dutch tax revenue each year. Though visiting students cost money while they study, some of these students stay. And as they are highly educated, they get good jobs and pay taxes accordingly. A 19% stay rate is assumed, based on international research.

To maximise the benefits of international students, the Dutch marketing campaign is not only about attracting students, but also about retaining them once they have graduated. A high stay rate increases the economic spinoff of academic mobility.

Research from the Australian government has shown that higher education is their third largest export product, totaling $15 billion in 2012.

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Benefits go to society at large as well as to the universities enrolling these students. An important indirect benefit is increased tourism and travel. Students like to discover their new country, often bringing with them their families and friends.

More than just a flashy website Attracting students through national marketing campaigns can be done in many ways. Most countries have some sort of national campaign; Study in Holland, Campus France, Study Malaysia. They all have sleek looking websites with not only information about education, but also a sense of the culture.

But it doesn’t stop here.

These countries also recruit offline to targeted markets.

The Dutch government has identified ten markets where recruitment offices have opened their doors. These offices are located in fast growing economies; from Indonesia, to Brazil and Russia. France and Germany have taken a slightly different approach - education is integrated into a broader economic and cultural presence through the establishment of, for instance, the Instituts Francais and the Goethe Institutes.

Other strategies include providing financial incentives (grants for the most talented students), or legal benefits (lenient visa requirements which permit work as well as study). Countries that have traditionally been net exporters of talent, China and Brazil for instance, are now targeting their own foreign students in order to lure them back after after their study abroad.

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The student experience

The growing appetite for international higher education has a profound impact on everything from youth travel, university programmes, student services and accommodation. Student populations become more diverse, and so are the housing and community needs. Universities and housing providers are exploring new and innovative partnerships to meet the expectations of students and their parents. How should local student housing models adapt to the changing demands of students? What can technology, internationalisation and social media do to create a true student experience?

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THE RESURGENCE OF LEARNING COMMUNITIES

by Patricia A.R. Martinez What will The Class of 2020 be expecting from their residential experience? The current students in sixth grade will be the Class of 2020. Who are they now and what environment are they living in? What careers may be in existence in 2020 that do not exist today? As we look to create engaging student experiences and facilities that reflect the students’ needs as well as desires for the space, we must ask ourselves what we know about the student experience. How are we building strategic alliances to meet the ever changing demands placed upon higher education institutions by the students and families of today? What are we doing to ensure that the student has a holistic experience within our facilities?

Employers are looking to hire students who have the ability to think critically with confidence to innovate, facilitate and lead small and large groups while working in a flat organization, operate in a diverse work environment, be a life- long learner and master information technology. Therefore, we must build/ renovate/retrofit facilities that allow for students to gain these skills and abilities.

prohibitive. In the US, inter-generational poverty is at its highest and education is the biggest disrupter. We (in the US) have increased our access to post-secondary education, but half of our students will drop out before receiving postsecondary credentials. About 60% of upper income students complete a degree compared to 12% of lower income students.

Although education may be the pathway to possibilities, it is a pathway that is difficult for all to travel. Partnership, alliances and collaboration are a must for student success.

The landscape of higher education is changing and with it the time is ripe for strategic partnerships and alliances that have not been ventured in the past.

Patricia A.R. Martinez, Director for Residential Communities, Northern Illinois University, President, Association of College & University Housing Officers-International (ACUHO-I)

Outside the classroom You see a movement in the United States toward curriculums created in residential facilities focused on student learning.

There is a resurgence of learning communities that partner with the academic side of the university to achieve student success in preparation for careers. Learning Outcomes and adult learning theories are now being used in residential facilities to enrich the student experience outside the classroom. The foci of learning in a residential facility mirror what employers are looking for.

In the United States, large universities are building or creating small communities for students to interact and have all their needs met through tutoring centers, health service satellite offices, computer labs, counseling centers and academic advising centers all housed within the residential accommodations. The ‘one stop shop’ can exist where students are known by name and have a network of individuals able to direct and aid them in being successful as a college student.

One such example exists at Michigan State University where neighborhoods were created to allow students to have the resources available of the large institution while experiencing the individualized student contact of a smaller college setting. Students of today are looking for more individualized, personal resources and programs that are specific to them.

Pathway to possibilities Society sees education as the pathway to possibilities: educationally, economically, socially, and personally. However, in the quest to attain further education, costs have become

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TRAVEL TO LEARN, NOT TO ESCAPE EDUCATION AT THE HEART OF YOUTH TRAVEL BOOM The global rise of student mobility is closely linked to trends driving the booming youth travel industry. Young people seek meaningful travel. Study and work abroad do exactly that for students.

This provides opportunities for education and accommodation providers, observe youth travel experts Samuel Vetrak and David Chapman.

“We have seen a rapid growth in this so-called meaningful travel,” says Samuel Vetrak, CEO of StudentMarketing, a market intelligence and business development consultancy specialising in student travel. “Young people and students tend to travel to learn, as well as experience new things.

They are not escapists travelling away from something - they like to spend their time abroad purposefully. For instance, a combination of language course and vacation has become a popular alternative to traditional leisure trips.”

The youth travel market represents an incredibly attractive growth market for the education industry. The New Horizons III - a global study of the youth and student traveller found that 22% of the 34,000 respondents cited language learning as the main purpose of their trip overseas in 2012. There was also an increased share of young people travelling for work experience (15%) and another 15% were travelling for study (other than language learning). Holiday was still the main purpose of the trip for 47%, although this percentage was significantly down from over 75% in 2007.

Cultural experiences David Chapman, WYSE Director General: “Young travellers are trying to get more from their time abroad. Our research shows that the nature of youth travel has changed enormously in the past decade. Young travellers today want, more than ever, to be enriched by cultural experiences, to meet local people and to improve their employability when they return home.”

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Language courses have traditionally been an incentive to go abroad. In recent years, a growing number of universities have started offering summer courses. These courses are often packaged with cultural programmes and include accommodation in student residences. Vetrak: “Language or summer courses have become a means – people learn a foreign language abroad in order to enrol at a university in the given country, or to get a better job at home. The English

language travel market alone represents US$10.6 billion.” This demonstrates how youth travel and international academia are intertwined.

Volunteering abroad is another growing phenomenon, with the supply skyrocketing between 2005 and 2011. The number of programmes on offer has increased almost 10 times.

Youth travelers spend more The total number of youth-travel arrivals worldwide surpassed 200 million in 2012. Young travellers tend to stay longer in one place, and thus spend more money. They are also more likely to come back if they have a good time. Research from Australia shows that the average spent per trip by incoming visitors was AU$4,812, while youth travellers spent an average of AU$7,279 and had a return rate of 56%. Chapman: “Because young people tend to spend more time in the same place, it is inevitable that they make new friends, resulting in a higher return rate.”

The youth travel and education market is not only showing rapid growth, it is also changing. The service providers, tour operators, information resource providers, specialised travel agents, accommodation providers and other members of the travel industry, are all aware of the fact that youth travel and education are indeed connected and is becoming a serious submarket.

StudentMarketing is seeing rapid consolidation in the industry: mergers and takeovers in the education and accommodation sector are creating an industry with fewer, but bigger and more professional players. Youth Travel has even been placed on the WTO’s agenda, further recognising it as a submarket of the global travel industry.

With the number of international students expected to nearly double by 2020, the demand for flexible and serviced student accommodation will grow, and StudentMarketing expects this growth to be significant. “Our estimate is that by 2020 the student housing market will have grown an additional US$30 billion in market value compared to today”, says Vetrak.

New business models The changing youth travel market requires a different accommodation product. Hostels and budget hotels are upgrading services and room design to cater to the so-called flashpacker. Hostel group Generator - operating 6,400 beds throughout Europe, having recently purchased properties in both Rome and Paris - is attracting new customers with smartly-equipped rooms and sleek design.

Student housing operators are catering to travellers and students alike. In Edinburgh, travellers can stay in university

or student accommodation. “With single, twin and double ensuite rooms from ÂŁ30, it is a comfortable and cost effective alternative to staying in a hostel or a hotel â€?, reads the website of one of the providers. Rooms are available all year round, but bookings are mainly in the Christmas, Easter, and summer vacation periods.

Melon District operates student residence halls in two Barcelona locations. As well as students, young travellers are also welcome. Rooms can be rented for a single night, a few weeks or a full semester. The Student Hotel in the Netherlands and Belgium applies a similar strategy. Casa400 in Amsterdam is a student residence during the academic year, becoming a regular hotel in summer.

The business incentive is clear. In addition to giving young travellers a fun, student-style experience, the operator can leverage student-housing investments in times that student numbers are lower, such as the summer.

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THE STUDENT’S CHOICE European students have more and more options when it comes to choosing their studies. But what if you are a prospective student and you can choose between 30,000 study programmes; how do you find what is right for you? Understanding how students choose their international academic careers will be essential for universities and student housing providers, say Nannette Ripmeester and Joran van Aart.

A look on studyportals.eu can be quite enlightening to anyone who has not been at school for a while. A quick search can show you all the Art History Masters programmes in Sweden, or the options if you want to study Law in Italy. And because European education has become more unified through the Bologna Process, all these studies can be easily compared.

So there are more options, and these options are becoming more transparent. The question arises; what it is that drives the choices of the new generation?

Word of mouth Joran van Aart is Student Value Director at StudyPortals and describes the process. “It all starts with awareness of the opportunities that are out there. Most students still follow the traditional pattern of choosing a school and study in their home country. A growing, but still relatively small, proportion of students do indeed take study abroad into consideration for their academic careers. The international option is often brought to students’ attention by friends or family members who have studied abroad, or an enthusiastic French teacher telling them about the possibilities of studying in France. The first step in the process is often one of personal connection”.

Nannette Ripmeester, Director of Client Services at i-graduate, confirms this. “Word of mouth is a very important factor at the start of an international student career. This means that a good experience contributes to a student recommending a city or university to someone else”.

Find it online When a student has made the decision to opt for an international study, the Internet is the next step. The number of programmes available to international students is enormous. Universities have adapted and made their websites accessible and easy to find. But it is hard to get a clear view of all the options.

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Companies like StudyPortals have stepped into this space and made finding the right study programme a lot easier. They have about 20,000 Masters programmes, and 10,000 Bachelor programmes in their database. 75% of these are in the English language.

Get ahead The top three factors why students choose an international study according to i-graduate’s International Student Barometer (ISB) are: • employability • career advice • work experience International students are looking to get ahead in life and want to create options for themselves that will be enhanced by international experience.

StudyPortals has also done research, asking international students about their positive and negative study experiences abroad. The top three reasons why these students would recommend their study experience are: • city and culture • academic study • social life The top three reasons why they would not recommend their experience are: • university services (too bureaucratic, too slow, not

helpful finding housing, etc) • academic quality too low • cost of- living too high In general, it seems that the main reason to study abroad is academic. When students choose a programme they are concerned about quality and teaching methods. But when they evaluate their international experience, the answers are broader. Life in a new place involves more than just academics.

More competition – differences remain The increasing range of choice and transparency has created more competition between universities. But as Ripmeester points out, “there are still significant differences between higher education in different countries. Education is strongly influenced by local culture and tradition. One of the key differences between countries is the cost of education.”

Studying in the UK is quite a lot more expensive than in most other countries on the Continent. This is increasingly a reason for students from the UK to choose to study elsewhere. These factors are not going to change quickly, and illustrate that the higher education market is not something that operates as a single market.

Van Aart notices a difference in marketing efforts by universities due to changing dynamics. They are moving their budgets and efforts from offline marketing, such as education fairs, to online marketing: making sure that students can

31

Ripmeester: “Make sure you mingle the various nationalities with domestic students - this ensures good integration between the groups and makes the most of the ‘international vibe’. Ensure there’s free WiFi with good bandwidth so all the students can watch a movie at the same time. If you develop fully-furnished housing, make sure you explain why the pricing is higher.

Students often compare prices but forget to add what is included in the rent price. The space doesn’t have to be huge, but it shouldn’t feel like a cubicle. And price does matter; make sure it doesn’t get too expensive - only a few student groups can afford this.”

find them and that their online information is good. And the most important thing in attracting international students is to provide education in an international language, usually English.

But education is not necessarily about competition, Ripmeester adds. “In several countries, i-graduate organises Best Practices events. At these events, educational ISB partner institutions share their experience with others. One could argue institutions are giving away their competitive advantage, but that is not how universities see it. They are working on improving the education system in their country, which benefits everybody.” €16 billion in grants per year There are, however, still factors that limit student mobility.

Within Europe, costs are the biggest concern. The cost of living in the UK or Sweden is a lot higher than that in Portugal. To help reduce this barrier, StudyPortals has also started taking inventory of funds that are available to stimulate international student mobility. Until now they have found €16 billion worth of grants available per year, which they publish on a separate website. Funds range from Erasmus scholarships, to funds for specific study topics, specific regions, specific population groups, etc.

Bad housing can be a deal breaker So what does this mean for student housing? Students rarely choose their studies based on availability of good housing.

But if standards or expectations are not met, it can be a strong negative factor. Housing is something that is needed every day, starting on the day of arrival. Bad housing has an enormous impact on the student experience as a whole.

Poor quality housing, limited availability, housing that is not affordable; these are all reasons why people advise against studying somewhere. Bad housing can become a deal-breaker.

Considering how important word of mouth is in choosing an international study, housing is an important factor for places wanting to attract international students.

RTop

Van Aart: “I agree, most important is that students can afford it.

If they cannot afford it, they will not come. Many students don’t need much. When a certain level of quality and service are met, they are satisfied. Very important is that there’s Internet available and that the accommodation is relatively centrally located. For international students the quality of the experience increases if they can book their accommodation in advance. This takes away a major concern that they may otherwise have. It would be wise for housing providers to make this possible, or partner with universities who can arrange this”.

Studyportals.eu

• LARGEST INTERNATIONAL STUDY CHOICE PLATFORM IN EUROPE • 2.5 MILLION VISITORS PER MONTH • OVER 30,000 STUDY PROGRAMMES IN EUROPE • AN ESTIMATED 90% OF UNIVERSITIES IN EUROPE REPRESENTED

i-graduate:

• WORLD-LEADER IN CUSTOMER INSIGHT INTO THE EDUCATION SECTOR • HELPS EDUCATION PROVIDERS ENHANCE COMPETITIVE ADVANTAGE AND QUALITY • OVER 1400 UNIVERSITIES, COLLEGES AND SCHOOLS IN 24 COUNTRIES

10 key influences in choosing institution

TOP 10

KEY INFLUENCERS IN CHOOSING INSTITUTION ISB (58257)

Institution website

36%

Agent

31%

Friends

32%

Parents

22%

Current students

16%

Alumni Social Networking site

Institution websites are the most important influencer in choosing an institution, while teaching quality and reputation are the top drivers in study decisions.

17% 7%

A word of expert advice Independent 7% What would thewebsite experts on student choice recommend?

4% Top 10 key influences in choosing institution

On site campus open day

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Source: International Student Barometer, i-Graduate ISB (58257)

Source: International Student Barometer, i-graduate

Institution website Agent

36% 31%

TOP 10factors FACTORS IN STUDY DECISION Top 10 in study decision

ISB (67780)

Teaching quality

96%

Qualification reputation Reputation of education system

93% 92%

Institution reputation

94%

Research quality Cost of study Cost of living

91% 85% 84%

Personal safety

86%

Earning potential

84%

Specific course of study

84%

Top 10 factors in study decision

Source: International Student Barometer, i-Graduate ISB (67780) Source: International Student Barometer, i-graduate Teaching quality

96%

33 Cathalina Meloen, Delft, The Netherlands Photography: Henny Boogert

34

Mario Frank, Cologne, Germany, Photo by Henny Boogert

TECHNOLOGY BUILDS STUDENT COMMUNITIES THE STUDENT EXPERIENCE IS ENHANCED BY ONLINE PLATFORMS

Today’s students are the most connected generation to have ever roamed the planet. Wherever they go, they take their smartphones, tablets and laptops with them. WiFi is no longer just ‘nice’, it is considered essential; a utility just like water, electricity and heat. But technology in student housing is much more than just skyping with grandma and posting your pizza to Instagram. Technology is at the heart of the student’s experience.

With free WiFi and online booking systems now the norm, technology is an essential component of student housing.

Some owners and operators have partnered up with specialised technology companies, providing students with the services they have come to expect. We sat down with Paul Kan of StudentCom, the leading provider of digital media services in the UK, to hear about where he sees technology enhancing the student experience.

Book in a few clicks “This experience starts well before the student arrives at their room,” Kan explains. StudentCom has developed technology that streamlines the contact between the students and the student housing provider. When a student books a room – online of course – he or she can log in with their Facebook profile and choose all the options they want. Fast WiFi, or very fast WiFi? Chinese TV channels? An international phone plan? A meal plan? Weekly cleaning? A few clicks and they are done. Costs are upfront and transparent.

When the student arrives to check in it’s a simple matter to log onto the network, and the room, along with all the requested services, is ready. Saving time, not only for the student, but also for the landlord. The same system can be used to make rent payments, request repairs to that leaky sink, and check if a washing machine is available. Landlords can send messages to their students; ‘Pizza party in the lobby on Friday!’ or ‘Your rent is due tomorrow…!’. They will see them as soon as they log onto the network.

Recent international expansion StudentCom has recently expanded into the Netherlands and Belgium, providing its services to The Student Hotel locations in Liège, Rotterdam and Amsterdam. “StudentCom’s

international move has been technically relatively straight forward,” Kan explains. “It has required an investment in a local data center, and setting up partnerships with the right hardware and networking providers in the Netherlands.”

StudentCom is considering to expand its services into other European markets. “Language may be an additional barrier here, as we won’t be able to use the English language interface and support in all countries, however, there are various ways in which language issues can be resolved. But aside from that, the way technology can be used to create a seamless experience for landlords and tenants is the same in every country.”

Building communities online and offline One of the more important and fun aspects of technology is its ability to build communities. Student housing is by definition a place where everyone gets to meet each other. The use of social media makes this even easier. StudentCom have developed an application that allows the option for Facebook functionality to be integrated into StudentCom’s digital media platform. They can choose to meet their friends online, see what is going on in the communal areas, or check what’s for dinner. They can even meet their neighbours before they’ve actually checked into their new room.

As more of these customer interactions move online, security and privacy become important issues. But Kan assures us that the systems are designed with their customers in mind.

“Students can get quite innovative when they go online.

But security systems are programmed so that problems are immediately isolated. The network as a whole cannot be affected. And the issue of privacy is a matter of what people choose to share,” Kan says. “If a landlord asks us, we can provide them with user statistics in order to improve their systems. But information on individuals is never shared, and no confidential information is ever passed on to third parties.”

It seems like the future is already here. But there’s always more. So what is StudentCom working on now? Kan explains that their aim is to make their systems even more intuitive. “It should feel so natural that you don’t even notice it’s there. In the end it is all about the user experience.”

StudentCom

• STARTED IN THE UK IN 2001 • PROVIDES NETWORKING TO OVER 50% OF ALL RESIDENTS IN

COMMERCIALLY- MANAGED STUDENT HOUSING IN THE UK, REACHING OVER 250,000 STUDENTS

• RECENTLY EXPANDED INTO THE NETHERLANDS AND BELGIUM • EXPECTS MARKET IN EUROPE TO FOLLOW THE UK.

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GENERATION Y WANT IT ALL, NOW! Each student settling in at their new university will be forming an opinion of their campus. Student opinions play an increasing role in how those campuses are seen by the outside world. The student experience, from housing to academics is becoming a consumer product, writes Nick Valentine.

There’s no doubt that students, once characterised as ‘revolting’, are now more often seen as ‘empowered’ or ‘consumer-aware’. Either way, they remain vocal. Further, their experience of universities, even for 18-year-olds fresh from school, will be shaped by two new realities.

First, of course, is the perception that they are paying for their higher education. The three words ‘value for money’ are entering the higher education world with a vengeance.

The other new reality that universities have needed to confront is far greater literacy among young people about what constitutes ‘service excellence’ and their expectations of that as a norm.

Consumer generation The relatively affluent generation entering universities in 2013 have already become experienced consumers, schooled in the worlds of package holidays and hotels, of service companies and of peer reviews via the Internet and social media.

“This is the Trip Advisor generation,” said Simon Horniblow, Managing Director of CampusLife, whose whole business revolves around helping universities manage and enhance their relationships with students.

“This generation expects everything to be just so, they expect everything to be connected and can’t understand it when they find otherwise. And they won’t put up with it in silence.”

However, this readiness to grumble on the part of students also provides universities and housing providers with opportunities to change perceptions. The satisfied customer has already cast a vote in your favour. The unsatisfied ones can be converted – if you can engage with them in the right way.

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Smarter media ‘The right way’ no longer means email, let alone letters. Every student is issued with a university email account during registration. A recent survey suggests the majority check email on that account around every 14 days. By contrast, research by IDC in March discovered that young smartphone and tablet users check in with Facebook around 14 times a day.

“We carried out a series of voxpop interviews with students on campuses all over the country and they overwhelmingly expected their universities to be present and active in these social media spaces; particularly Facebook and Twitter but also on YouTube and Flickr,” added Horniblow.

“We started working in higher education around seven years ago, and at that time there was definite reluctance on the part of university faculties and service departments to be engaged in social media. It was an alien field and many questioned if it was even appropriate for institutions to be ‘chatting’ with students in that way. Now the mind-sets are very different, I think. Institutions and students alike see these social media spaces as forums and bulletin boards – places to exchange relevant information and points of view and ways that can become more ‘real’ through the use of rich media.”

Shifting perceptions Experts in the field believe that effective use of communications and media can play a key role in shifting perceptions. They point to the example of a leading university in the Midlands that had built a new Halls of Residence, but was dismayed to be confronted with a blizzard of Tweets, Facebook and YouTube postings and other complaints from new students who found they could not receive a mobile phone signal in their rooms or communal areas.

The university received several hundred negative comments over the course of a few days, before it took to Facebook on its own behalf, pointing out the reason for the problem – that the ultra-green design of the building and its emphasis on thermal insulation also blocked RF transmissions – as well as promising a solution, installing signal repeaters as a matter of urgency. No more complaints were received and the university earned plaudits for its responsiveness and green credentials.

and tablet ownership inevitably means that the university campus will become more virtual. Students are already paying their accommodation fees and accessing resources on their tablets and mobile phones.

“But there is more that can be done. Higher fees and more demanding students mean universities are increasingly striving to better engage with their students and move to more collaborative relationships with them. Mobile apps can help with this in ways that universities might not yet have envisioned.”

Big picture The big picture that is emerging is one in which student perceptions of prospective universities and housing providers, and their quality of experience on campus are increasingly shaped by IT and online communication channels.

These influencers start with the university’s online presence, both on its own website and on social media. They then progress to the quality of dialogue and engagement the university can have with the student even before they arrive on campus. Simon Horniblow at CampusLife used University of Glasgow as an example. “Because they’ve set up a ‘What will my room look like?’ gallery on Flickr, that relieves a whole lot of stress on the Accommodation Office - many students have already visited the halls, chosen their rooms, even checked how much drawer space they have, all online.”

But once on campus, it is the quality of IT, in particular the bandwidth, speed and accessibility of WiFi and support for Bring Your Own Device (BYOD) that will determine how connected modern students feel. This will determine their effectiveness in engagement with studies and campus life as well as the ways in which they can be addressed by the faculty.

In short, the quality of student experience is increasingly defined by what happens when they click ‘connect’.

This article has been edited from its original version, which was published in University Business Magazine on 25 September 2013. www.universitybusiness.co.uk

Game changer Mark Harvey, UK Sales Manager from the business provider Capita Further and Education believes that higher fees have become a ‘game changer’ in making would-be graduates more selective.

A key finding in their research showed the unstoppable growth of mobile apps on campuses. Students said they were increasingly relying on these for their day-to-day timetables (53%), campus news (52%) and even to work out where they were (55%).

Mark Harvey feels there are further evolutions that universities need to go through, “The rapid rise in smartphone

37

INVESTMENT SPECIAL

European student housing goes mainstream Purpose-built student housing used to be the exclusive domain of non-profit organisations and universities. Successful private investments in the UK and the US combined with growing demand for student housing has fueled investors’ interest in continental Europe. Multiple funds have been established to invest directly in European student housing and institutional investors are set to enter the market. How attractive is the European market in the short and long run? Who are these new investors? Why has it taken them so long compared to the UK and the US? Which cities are they looking to invest in? What can and should European cities and universities do to attract private investors? This special section highlights recent market developments and takes a closer look at emerging European student housing markets.

38

This investment special was produced in cooperation with our real estate media partner PropertyEU, the leading source of information on the commercial real estate industry in Europe.

See www.propertyeu.info for more information.

“Student housing has emerged as an institutional investment product”

EMERGING ASSET CLASS Student accommodation has emerged as an institutional investment product in the UK due to its low volatility and stable cash flow. Continental Europe is following suit, writes Judi Seebus, Editor-in-chief of PropertyEU.

Judi Seebus, Editor-in-chief, PropertyEU

A staggering rise in investment volumes and the entry of several new institutional players in the UK student housing segment point to an unmistakable trend: a new mainstream asset class is emerging. Europe’s most mature property market has seen student housing transactions double to some €3 bn in 2012, fuelled by many large-ticket deals including the acquisition by Dutch pension administrator PGGM of a 60% stake in the University Partnerships Programme, the secondlargest provider of on-campus student accommodation in the UK. “The perfect match between the inflation-linked, stable cash flows and the requirements of our clients was a crucial element of this deal,” said PGGM’s head of Infrastructure Henk Huizing. PGGM acquired the stake from funds managed

by Barclays Infrastructure Funds Management (BIFM) for a price understood to be at about €1 bn.

The Dutch pension fund is the latest in a string of foreign institutional investors to enter the UK student accommodation segment in the last 18 months. Earlier this year, APG joined forces with LaSalle Investment Management to raise £238 mln (€282 mln) for a joint venture vehicle offering developers whole loan construction finance on student housing schemes.

The fund, LaSalle Residential Finance I (LRF I), is to provide a £100 mln development loan for the construction of Urbanest’s 1,100-bed Westminster Bridge Road scheme. Similarly, the real estate fund management arm of M&G Investments recently acquired New Carnegie Court, a block of flats at the University of Aberdeen, from developer Unite.

Award winner: The Student Hotel, Rotterdam, The Netherlands Award: Venuez best Hotel Concept award 2012 Desiner: Staat, creative agency Project size: 252 rooms Typical Room: 16 m2 , private bathroom, some with private kitchen

These transactions point to the growing appeal of the student accommodation sector to UK and international institutional investors, who are attracted by the annuity-type income stream as well as the sector’s low volatility and reliable occupational market. “Compared to other alternative sectors, student housing offers the best proposition for stable cash flow at mid-range yields,” commented Jo Winchester, head of student housing advisory at CBRE. “In this era of low returns and low growth, it provides one of the most robust opportunities for development-style returns of all the sectors.”

39 THE STUDENT HOTEL, ROTTERDAM

INVESTMENT SPECIAL

GLOBAL CAPITAL GRAVITATES TOWARDS STUDENT HOUSING A growing volume of international capital is gravitating towards student housing as an emerging asset class in the European real estate arena – and not just from the US. GIC Real Estate, part of the Government of Singapore Investment Corporation, is a case in point. Last year, GIC expanded its partnership with London-listed Unite Group, the largest provider, developer and manager of student accommodation in the UK. The pair are now targeting a £1 bn (€1.2 bn) London portfolio and have extended their joint venture - Unite Capital Cities – until September 2022.

Middle Eastern investors are likewise pushing into the sector. Earlier this year investment manager Apache Capital Partners bought the Brunswick House student accommodation scheme in Cambridge for £26 mln (€30 mln).

Apache Capital Partners is a London and Bahraini-based real estate investment management firm specialising in sharia-compliant investments. Apache has also teamed up with McLaren Property on the £45 mln Paris Gardens student accommodation development in southeast London, a 253-bed scheme scheduled for completion in autumn 2013. Richard Jackson, founder and partner at Apache Capital Partners, said McLaren is the group’s “trusted student accommodation partner on behalf of its Middle Eastern investors.” In total, McLaren Property has a £700 mln pipeline of development assets.

Global capital is also targeting student housing in mainland Europe. In Germany, for example, a group of investors from Dubai recently took a 36% stake in International Campus, a Munich-based specialist in student residences. “We have found some active and experienced capital partners with whom we will build up our own portfolio of modern student accommodations and consequently continue to grow,” commented Horst Lieder, CEO of International Campus. He declined to comment on the identity of the investor group, but noted it was prepared to make further investments to support the growth of International Campus.

“It’s a sleep well at night kind of investment” Tom Ward, head of student accommodation at GCP

INREV CEO WARNS AGAINST HERD BEHAVIOUR Student housing may be gaining popularity among institutional investors in the UK, but there are limits to the growth of this asset class in continental Europe, warned Matthias Thomas, CEO of the European Association for Investors in Non-listed Real Estate Vehicles (INREV). “There are always opportunities, but when you see opportunities to make money, you often see a large following which indicates the time of opportunity may have passed. And that’s when the alarm bells should go off.”

Thomas said there was a fundamental difference between the education system in the UK and mainland Europe. “Student housing is a big thing in the UK because the country is popular for international students. There’s also a high degree of owner occupancy and not enough rental stock. But if you look at continental Europe, countries like Germany will first need to change their international programmes into English if they want to attract international students. Otherwise they will be restricted to the student population in their local market. I don’t think there are many Chinese or Indian students for example who will want to learn German. For that matter, I don’t see a cultural shift of this nature happening across France or Spain either.”

A key issue in this context is also the quality of the education system in continental Europe, he added. “The education system is closely linked to public finance and is a highly regulated market. That has an impact on the quality of education and research. The list of the top 10 universities doesn’t change that much over time. The question is whether governments should invest in universities that don’t belong in the top 10.”

There are other reasons why European governments may be reluctant to pump additional funds into their education systems, he continued. “I’m not sure whether European society needs so many academics. The current strength of the German economy is not related to the high level of academics. The German economy relies on the high quality of its manufacturing base. And what do you do with a student housing project if there are not enough students? We’ve seen offices converted into student housing, but can we convert student housing into something else?”

40 Matthias Thomas, INREV

MARKET HIGHLIGHTS

BOUWFONDS IM LAUNCHES NEW STUDENT RESI FUND

HEAVYWEIGHT INVESTORS GET ON BOARD

Bouwfonds Investment Management launched a new European fund focused on student residences earlier this year. Bouwfonds, part of the Dutch Rabo Real Estate Group, said the Bouwfonds European Student Housing Fund will be structured as a German ‘Spezialfonds’ and will be placed with German institutional investors. The fund, with a core risk profile, focuses on major European university towns and cities in Germany and France, followed by the UK, the Netherlands and Scandinavia. The targeted fund volume is between €200 mln and €300 mln. The expected annual yield for investors is around 4% (IRR of 5.5-6.5%) and the maximum leverage 40%.

Investment manager Bouwfonds IM has already invested and managed student housing on behalf of its European Residential Fund, created in 2007. The vehicle now comprises six student housing complexes, located in Germany and France. Bouwfonds believes the sector will continue to benefit from stable demand, driven in particular by growing numbers of foreign students from outside Europe. “Another plus point is the anti-cyclical nature of the student housing market: in times of economic weakness and poor job prospects, more people opt for higher education and tend to study longer,” the company said. Bouwfonds REIM has €5.5 bn assets under management.

Insurance companies and pension funds requiring longdated income are typically the most active players in student housing, but big private equity players are also venturing into the sector.

The number of private equity players entering the student housing market in the UK and Europe continues to grow. In 2010 US-headquartered Oaktree Capital Management backed the launch of UK-based student digs investor Knightsbridge Student Housing and it is now working towards establishing a £1 bn portfolio. Meanwhile, alternative investment manager Carlyle has brought its student housing platform to the Continent after operating successfully in the UK for years.

The company has teamed up with Benelux partner City Living to launch projects in the Belgian city of Liège as well as in the Dutch cities of Rotterdam, Amsterdam, The Hague, and Eindhoven. The partners aim to create a portfolio of around 10-15 properties with 5,500 rooms valued at some €350 mln by 2015. “When I came to the Netherlands the concept of quality student housing did not exist here…With The Student Hotel we’re building a new type of accommodation and a brand,” said Charlie MacGregor, managing director of City Living.

“This is virgin territory.”

Outperformers Indeed, the student housing investment market in continental Europe is still in its infancy and has yet to see significant amounts of private investment, with only a handful of investors active in the sector. Dutch investment manager Bouwfonds IM, part of the Dutch Rabo Real Estate Group, is leading the way with the launch of the Bouwfonds European Student Housing Fund, with a targeted volume of between €200 mln and €300 mln. The fund, with a core risk profile, focuses on major European university towns and cities in Germany and France, followed by the UK, the Netherlands and Scandinavia. It is targeting an annual yield for investors of around 4% (IRR of 5.5-6.5%). “If we compare the direct yields with those of more conventional residential real estate in our portfolio, these student residences are outperformers, despite their need for more intensive management,” commented fund manager Xavier Jongen.

Aside from Bouwfonds IM, a number of student housing specialists are active in Germany, including Youniq, Europe’s only listed student housing firm. UK developer Crosslane has also recently entered the country with the launch of the Victus European Student Accommodation Fund. The vehicle, a joint venture with German property company Bauer Capital, plans to acquire, develop and build 3,000-5,000 student beds throughout Germany over the next five years with a target value of around €350 mln.

41 Xavier Jongen, Bouwfonds IM

INVESTMENT SPECIAL

Award winner: Monash University, Clayton, Australia Award: RIBA International award 2012 Architect: BVN Architecture Project size: 600 studios Typical room: 20m2 , private bathroom and kitchenette

Award winner: The Green, Bradford, UK Award: CUBO best student housing award 2013 Architect: GWP Architecture Project size: 1,026 rooms Typical room: 10-12 m2 most with private bathroom, shared kitchens

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MARKET HIGHLIGHTS

STUDENT SUBMARKET EN ROUTE TO GRADUATION Limited trickle of deals reveals big institutions are beginning to open what was a niche segment to the wider investment community US-based residential property giant Greystar scooped the largest investment transaction recorded in the European student space so far this year to mid-October against stiff competition. In partnership with Goldman Sachs and advised by Macquarie Capital, Greystar Real Estate Partners purchased 21 student accommodation buildings, valued at £300 mln (€360 mln), which formed the bulk of the collapsed Opal student housing portfolio in the UK. Opal, once the UK’s largest private owner of student accommodation with around 20,000 rooms, collapsed into administration earlier this year after failing to refinance its debt.

The resulting transaction highlighted the fierce demand among institutions and big private equity funds to access the one-time niche market of student housing which offers an annuity-type income stream as well as low volatility and reliable occupancy levels. The huge demand for modern, student accommodation across Europe’s university cities coupled with a lack of suitable portfolios of the scale required by institutional investors creates an enticing opportunity but also a significant challenge. Many funds are seeking to tap into both student and investor demand by going into development, either directly or by providing funding. In February this year a group of investors from Dubai acquired a 36% stake in International Campus, a student residence specialist in Germany. APG and LaSalle Investment Management joined forces earlier this year to raise £238 mln (€282 mln) for a joint venture vehicle offering developers whole loan construction finance on student housing schemes.

Student housing provision Student housing provision rate*

Other investors have taken the more direct route of acquiring existing assets. But there isn’t much institutional-grade kit readily available. PropertyEU´s transactional data dating back over recent years shows that only a few sizeable portfolios have changed hands in this way in the UK. The largest deal in the UK sector last year – which saw €3 bn of deals in 2012 – involved Dutch pension administrator PGGM taking a 60% stake in the University Partnerships Programme.

PGGM acquired the stake in the second-largest provider of on-campus student accommodation in the UK from funds managed by Barclays Infrastructure Funds Management (BIFM) for about €1 bn. Also in 2012, UK-based Round Hill Capital picked up the Nido portfolio from Blackstone for over €513 mln. The Nido portfolio comprises 2,526 beds across three prime London schemes situated in Kings Cross, Spitalfields and Notting Hill. The Coral Student Portfolio fund - advised by CBRE - provided a combination of debt and equity for the deal.

Another strategy is to purchase sizeable, individual assets to contribute to a portfolio. In August, Legal & General Property acquired student accommodation schemes attached to universities in Wales and England. LGP - one of the most active investors in the student accommodation market in the UK - paid a total of £130 mln (€151 mln) for its sixth and seventh major university-backed acquisitions, bringing its total commitment to the sector to nearly £750 mln. In a transaction totalling £86 mln and reflecting a blended net initial yield of about 5%, LGP has acquired three blocks of student accommodation and an academic facility, let to INTO Newcastle University on two 35-year leases. Comprising 534 student rooms in total, the investment also includes 4,000 m2 of bespoke, high specification teaching space. In Wales, LGP purchased a new 1,000-bedroom, 23-block development, let to Aberystwyth University for 35 years from completion, for a total consideration of just over £43 mln. Work on site commenced in March 2013 and is being completed by December 2014.

rate *

25% 20%

Sweden has Europe’s highest share of students living in purpose built student housing, followed by the UK and the Netherlands.

15% 10% 5% 0%

*average provision rate of university cities appearing in the Times Top 400 Source:Savills Savills World Research Source: World Research

43

INVESTMENT SPECIAL

POWER BROKERS: MONEY IS NOT THE ISSUE Few people have seen and done it like these power brokers. They are advisors to buyers and sellers and have seen the UK market grow and boom. Today they are all looking to apply their skills to continental Europe. Where do they see opportunities? And what does Europe need to fix in order to welcome investors?

“Money is not the issue,” says James Pullan, Head of Student Property at Knight Frank. “Investors are ready to invest in student housing, and the market is good. Investors are seeing a market that looks a lot like the UK 10 years ago. We see many places that we would call virgin cities.”

If the Power Brokers agree on one thing, it’s that the European market offers an interesting and largely untapped demand for specialised student housing.

Jo Winchester, Senior Director, CBRE: “Overall I would say the market is very attractive, if only because of the volume of students.” But she adds, “there are big differences between markets. Students in the UK have a certain way of living, and the industry has grown around that. Students in Germany or Italy follow a very different study pattern. Germans often take time out for a ‘gap-year’ during their study; Italians traditionally live with their parents. Differences in culture demand a different approach in each market.”

Europe: attractive, but still a divided market Winchester continues: “What the market needs really varies, depending on the local culture. In general, I think you can distinguish two markets that coexist. First, there is the growing market for international students. These students are more likely to want UK-style purpose-built housing in a mix of clustered and private units. For international students it is essential that they can book their accommodation in advance.

Then there is the market for local students, where cultural differences per market play a much bigger role. Overall I would say that value for money is more important in this market.”

These differences prohibit investors from seeing Europe as one single market for student housing. Differences between countries are still strong determinants in investor decisions.

Philip Hillman, Lead Director, Student Housing and Higher Education, Jones Lang LaSalle: “I would also argue that the market needs critical mass. At the moment, many of the opportunities are too small to attract global investors. Also, investors want to see evidence of transaction levels. In these early years in the development of the sector, the exit position for an investor remains unclear. It will take some time for this to change.”

44

Marcus Roberts, Head of Student Investment & Development, Savills Class of 1993 Studied Urban Estate Management at the University of Glamorgan (now University of South Wales) Student house: First year in halls of Residence - basic but practical. Second and third years in a dreadful, cold, damp, smelly house full of rugby players.

Rent: Halls £35 per week incl. food. Shared house £25 per week each plus bills.

Rules rule Another factor is the profusion of rules and regulations. Local planning regulations in many places do not have a category for student housing, which often falls somewhere between residential (functional) and hotel (layout) real estate. Marcus Roberts, Head of Student Investment and Development at Savills: “In some jurisdictions the regulations, particularly around the rent that can be charged, are prohibitive to attracting investment. The Netherlands and Sweden have the strictest rent control regulations. For investors it is a factor they cannot control, so many will choose to invest in a market that does not have these limitations.”

James Pullan, Head of Student Property, Knight Frank Class of 1991 Studied Surveying, Urban Estate Management at the University of Portsmouth Student house: Shared terraced (row) house in the private sector - in very poor condition.

Rent: Very cheap

Local university partnerships create investor confidence Roberts: “In the UK there is a greater link between accommodation and university life. It’s all part of the universities’ drive to provide ‘the student experience’. In Europe it’s all left to the private sector.” Hillman adds: “It would be easier if universities throughout Europe would be more open to working with developers and investors. Together they can develop lease and nomination agreement models appropriate for their situation. It is difficult for investors to rely only on ‘direct let’ possibilities.”

Finding investment sweet spots But despite these differences and limitations in the market, the sense of opportunity and untapped demand prevail. Where would our brokers invest their own money?

Hillman: “I would invest in cities with world-class universities and a high proportion of overseas students. I think the demand demographics are very strong in many European cities – the issue is perhaps one of investor confidence and available opportunities, together with finding local partners with the appropriate expertise in development and management of student accommodation.”

Pullan: “For me it would be Paris. It stands out as a market that presents an incredibly attractive investment opportunity right now. Our research shows that Paris has the largest volume of students in continental Europe, and a very high proportion of international students (17%).”

Winchester: “I would find a place where the biggest student population overlaps with a strong underlying residential real estate market and without heavy rent controls. Examples would be Paris, Madrid, Barcelona, and a few other French cities.”

Roberts: “Germany is number one for me. And it would have to be a range of studio sizes and types. Scale I think is important.

This enables students to get the benefit of mixing with likeminded individuals. Amenities and communal areas are important for both socialising and working.”

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INVESTMENT SPECIAL

Fast WiFi is hot, sharing a bathroom is not The typology that is needed in the market is another thing that the brokers seem to agree on.

Pullan: “I believe in purpose-built student accommodation that is colourful, branded, contemporary, urban, sophisticated, secure and vibrant. But most of all, I think these places will be communities of students, where it is easy to meet others.

I think new accommodation will look like a mix of selfcontained units, small apartments and units with shared kitchens.”

“It should be something that looks cool, and a little hotel-like,” says Jo Winchester, CBRE. “Our experience is that the cheapest models are rented out quickly, but the most expensive models are as well. Communal spaces are important, and should be fitted out to a high standard. And most important is that there is good WiFi available that works throughout the building.”

Jo Winchester, Senior Director, CBRE Class of 1990 Studied Estate Management at Oxford Polytechnic (now Oxford Brookes University) Student house: First year in on-campus university accommodation. Shared a bathroom with 12.

Later in a shared house just off a county road. It was a bit damp.

Rent: £25 a week

Philip Hillman, Lead Director, Student Housing and Higher Education, Jones Lang LaSalle Class of 1984 Studied Land Management at Reading University Student house: First two years in a dated, but good quality Hall of Residence. Final year in a shared house with 6 friends.

Rent: Can’t remember, but received Housing Benefit from the government, which helped pay the rent.

46

Pullan: “What students don’t like is sharing a bathroom. What they do like is fast WiFi”. “But we have to be reminded of this - when I was at school, I didn’t own a computer and Facebook wasn’t yet invented. We have to acknowledge that the people who are making the investment decisions today often grew up in a very different era.”

INTERVIEW

“Becoming a local business in each market” London based Knightsbridge Student Housing is seeing opportunities in continental Europe.

It recently acquired its first international property in Madrid. The Class of 2020 spoke with Thomas Storgaard, European Acquisition Director about their plans and ambitions for Europe.

Maturing market, operational excellence “The student housing market in the UK is becoming increasingly mature with institutional investors becoming more comfortable with the asset class and the associated risks,” says Storgaard.

International challenges “There are a multitude of challenges associated with going international but one of the more important ones relates to the legal framework regulating the relationship between tenants and landlords. In markets where rents are regulated, like the Netherlands and Sweden, we will be less inclined to invest money, which indicates that our investors are concerned about whether their exposure to the asset class is inflation-proof.”

Creating value “We seek to capture value throughout the entire chain. We buy plots of land, build them out, and operate the schemes ourselves. We are owned and funded by Oaktree Capital Management so we do not need to partner with local investors. We do, however, need reliable local development and construction partners. On the customer side we seek to partner with universities, which is why we are so excited about joining in on the Class of 2020 student housing revolution.”

“Knightsbridge is an integrated owner and operator, which means that we own the real estate we operate. From an operational perspective we conduct our business under the ‘The Student Housing Company’ brand. One of our most important core values has to do with providing excellence in the product we seek to deliver, and ultimately offer the students a superior living experience.”

Brand value Storgaard: “I would like to think that The Student Housing Company brand is recognised in the market space, but to be realistic, I am not sure if it is the sole reason why students choose to live with us. Factors like budget and location are arguably more important criteria when students are looking for a place to live.”

Expanding, starting in Spain and France “Even though we think that the UK market still has scope for growth, we are seeing a lot of opportunity in continental Europe,” Storgaard explains. “The market there is like the UK was 10 – 15 years ago. We have been working on our continental expansion for over a year now. Last year we secured our first asset in Spain and we are working on a very exciting pipeline that should keep our construction team busy for the foreseeable future. Aside from the United Kingdom our current focus is on France, Spain and Ireland. In France we have recently recruited Arnaud Dunbois from Eiffage to head up our local acquisition and development efforts, and we will be announcing a similar level of hire for Spain shortly.”

Thomas Storgaard

“We ultimately seek to become a local business in the markets we operate in so whether we will use The Student Housing Company brand across Europe remains to be seen.”

47 Canal Point - Edinburgh

COUNTRY REPORTS: EXPLORING EUROPE’S EMERGING MARKETS Large student populations (see map) and low student housing provision rates (see graph) make continental Europe interesting for specialist providers of student housing. But circumstances vary per country. In this section we explore what’s happening in Europe’s emerging markets.

Student accommodation by typeby type Student accommodation Living in other accommodation

Living in student halls

Living with parents

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

Source: Eurostudent IV Source: Eurostudent SurveySurvey IV

Compared to the UK, the student housing sector is still in its infancy in continental Europe, although that is slowly changing. Until recently, it was largely viewed as an ‘alternative’ investment class, but as institutional investors show increased interest, it has moved more into the mainstream in the past year.

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Student population by country

Sweden

United Kingdom Netherlands Germany

Belgium

Austria

Switzerland France Spain

Italy

Number of students

1,250,000 2,500,000

Source: Savills Research, UNESCO Institute for Statistics

250,000

Domestic

European

Other international

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INVESTMENT SPECIAL

Germany New student housing JV targets German cities UK developer Crosslane and German property company Bauer Capital have formed a joint venture for student housing projects and portfolios in Germany. The parties have set up a fund - the Victus European Student Accommodation Fund - which will acquire, develop and build 3,000-5,000 student beds throughout Germany over the next five years with a target value of around £300 mln (€346 mln). Target university cities include Munich, Hamburg and Oldenburg.

For Crosslane, the JV marks the company’s first foray into the student sector in Europe. According to Savills, which advised the joint venture, research shows that the average growth of the total student population in Germany since 2008 is 5.50% per annum with the current number of total registered students at around 2.5 million. This compares to a total number of places in student halls of 228,500 (data from Deutsches Studentenwerk), showing a provision rate of 11% and a clear undersupply in the country, especially when compared with the UK where the provision rate is 23.7%. Savills also notes that yields for student residences in Germany have been stable in recent years at 5.50% for prime and 6.75% for secondary, reflecting the strength of the sector. Andrew Jamieson of Crosslane commented: “Having identified an opportunity to satisfy some of the increasing demand for student housing in Germany, we are very pleased to be progressing our first project in Europe with Bauer Capital, who have extensive local knowledge in the sector.”

International Campus mulls new student resi fund Munich-based student housing developer International Campus is mulling a follow-on student housing fund ‘for neighbouring countries’, following the launch of its inaugural student housing fund in Germany in early October. “We are looking at a follow-up fund for neighbouring countries, such as Holland, or even central European markets,” Horst Lieder, CEO of International Campus, told PropertyEU. International Campus raised €50 mln in the first closing in September for its first student housing fund, a Luxembourgbased vehicle, Luxembourg International Campus Student Housing I. S.C.A. The capital was raised from a sole international but unnamed investor, Lieder said. “They liked the idea of supporting education,” he added. “We are now talking to a range of investors for the next closing, from Middle Eastern to Danish investors.”

“The developer plans to raise an additional €200 mln to €250 mln within the next five years,” Lieder said. “The fund will then be geared to provide an investment volume of €800 mln,” he added.

The German student housing market appeals to International Campus because of Germany’s “long-term debt structures and excellent financing conditions,” according to Lieder. “The student housing market has been awakening over the past one-and-a-half years and it therefore seemed like a good time to launch our fund,” he said.

“Six projects, with a combined investment volume of €178 mln, some of which are already under way, will now be earmarked for the new fund,” Lieder said. These include ‘The Fizz’ Berlin, which International campus is developing jointly with Berlinbased Gädeke & Sons. Construction has already started on the project, which will comprise 212 apartments. The first students are due to move in for the winter semester of 2014.

The Fizz Frankfurt International Campus will also shortly start construction on ‘The Fizz Frankfurt’ project in the Gallusviertel district, which will provide 382 student apartments. It is due to be completed in October next year. Typically, apartments are around 23 m2 in size and generate rents of between €500 and €700 a month (depending on city and location), with all utilities included.

Once all ongoing projects are completed, International Campus will manage around 2,400 apartments in seven German cities. International Campus now plans to develop properties within the fund over the next five-to-seven years and is aiming for attractive risk-adjusted returns, with a target IIR of 14%. “This is possible due to the excellent financing conditions here, as well as stable rents,” Lieder said.

Youniq Youniq AG has focused on student accommodation since 2009. The company covers a significant range of the value chain – ranging from the purchase of real estate and land through project development including planning, planning permission procurement and construction, all the way through to commercial and technical management. Youniq is one of the leading providers in this segment with 3,270 apartments currently in the management or construction phases. These properties are located at 12 sites in Germany, including Munich, Erlangen, Karlsruhe, Frankfurt am Main, Mainz, Potsdam and Leipzig. The company is listed on the Frankfurt Stock Exchange. Youniq is expanding its operations into Austria with a project under way in Vienna.

Hotel developer moves into student housing German developer GBI AG has been active in the market of hotel development for over 40 years. Recently it has expanded its focus to include student accommodation. With its brand SMARTments it is drawing upon its hotel experience to create flexible apartments, marketed to students and as short stay accommodation as well. GBI AG is looking for investors, advertising 5% yields on its website. There are currently 5 SMARTment locations, in Hamburg, Cologne, Frankfurt, Darmstadt and Mainz, and two more projects under development.

COUNTRY SPOTLIGHT

GERMANY

COUNTRY STATS Student population: 2,50,000 %International: 12% Typical Domestic Course Fee: £0(€0)**Bawarian universities charge

tuttion fees at €1,000 per annum

Top countries of origin

Top institutions

China (11%) Turkey (6%) Russia (6%)

Ludwig-Maximilians-Universitat, Munich

(% of international students)

Average weekly rent in student accommodation: £48 (€57)

Source: Savills World Research Source: Savills World Research

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(Times World Rankings) Georg-August-Universitat, Gottingen Universitat Heideberg

National student housing provision rate (11%)

Austria Corestate plans €80m student hall in Vienna Swiss real estate investor Corestate plans to build 500 residential units for a 25,000 m2 , student housing-led development in Vienna. The project has an anticipated market value of €80 mln. The completed development will feature 1,000 m2 of retail and communal social space. The concept also includes incubator space to provide low-cost office accommodation for start-up businesses from the Vienna University of Economics and Business (WU).

The asset will be operated by student accommodation specialist Youniq, which owns, develops and operates around 3,500 student apartments in Germany across 13 locations.

Corestate founder and chairman Ralph Winter said at the time that the project was announced that it illustrated Corestate’s appetite for “unique investment situations across Europe.”

“Vienna, with a student population of over 170,000, roughly 10% of its overall population, and the WU with more than 25,000 enrolled students, generates a vast demand for student living space which cannot be met by public organisations and the residential market alone.”

The property is part of the MesseCarree urban development project and is located near the new campus of the Vienna University of Economics and Business, the Austria Center Vienna, the convention centre, and the leisure and amusement park Prater. Corestate is based in Zug, Switzerland, with partner offices in Frankfurt, Essen, London and Luxembourg.

“We have found some active and experienced capital partners with whom we will build up our own portfolio of modern student accommodations and consequently continue to grow”.

Horst Lieder, CEO International Campus

COUNTRY SPOTLIGHT

AUSTRIA

COUNTRY STATS Student population: 360,000 %International: 23% Typical Domestic Course Fee: £0(€0)

Top countries of origin

Top institutions

(% of international students)

(Times World Rankings)

Germany (37%) Italy (11%) Bosnia & Herzegovina (4%)

University of Vienna University of Innsbruck Vienna University of Technology

National student housing Average weekly rent in student accommodation: provision rate £58 (€69)

(16%)

Source: Savills World Research Source: Savills World Research

International students in Germany International students in Germany 2.700.00

270.000

2.500.00

250.000

2.300.00

230.000

2.100.00

210.000

1.900.00

190.000

1.700.00

170.000

1.500.00

1998

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Total number of students (left axis)

Source: GBI AG Research & Analyse

150.000

International students (right axis)

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INVESTMENT SPECIAL

The Netherlands Pace of Dutch office-to-resi conversion picks up Investors are increasingly refurbishing vacant office buildings in the Netherlands into student accommodation, according to a recent report from Savills. The trend simultaneously addresses the Netherlands’ office oversupply and the shortage of student housing, the report said. Evidence of the trend includes the redevelopment of Snippe in Diemen, known as project Diemervijver, involving the conversion of five former office buildings into a student campus due for delivery by early 2014.

Further examples include the recent conversion of former office building Rembrandtparkgebouw in west Amsterdam into a hotel, a higher education school and 128 student apartments by landlord Pronam; and The Student Hotel in west Amsterdam, a former office building redeveloped as a 700-unit student housing complex. The Student Hotel is transforming several other buildings in Dutch university cities. Its Rotterdam location will add 240 rooms in 2014. The Hague is opening next year as well with 310 rooms. A second Amsterdam location is planned for 2015 as are properties in Utrecht, Eindhoven and Enschede.

Judith Wintraecken graduated from the University of Eindhoven with a thesis on the subject, researching the conditions under which conversion to student housing would be possible. She found that there were many challenges to overcome, especially on the financial side, as office to residential conversion means a depreciation in balance sheet value. Wintraecken estimates that of the 6.9 million m2 of empty office space in the Netherlands, between 6% and 11% is suitable for transformation to student housing.

Dutch student housing yields dip below offices In 2012, rents for Dutch student housing showed sustained growth and the upward trend is set to continue into 2013, according to adviser Savills. The key driver is a growing supply/demand imbalance in the market. Although market evidence is still sporadic, gross yields for prime student residences will continue to range between 5.5% and 6.5%, depending on location, asset quality and rental contract.

This is lower than current achievable yields for prime offices (at 6.4%) and shopping centres (at 6.5%) in the Netherlands, showing the potential strength of this asset class. For secondary student residences gross yields can reach 7.5%.

The supply/demand imbalance points to an interesting niche investment, noted Marcus Roberts, head of student investment at Savills. “In keeping with past economic downturns, student numbers in the Netherlands have grown in the weakened labour market. This has created a window of opportunity for investors to address the imbalance of student housing supply and increasing demand.”

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A further 80,000 new student housing units will be required by 2020 to meet rising demand, as an additional 150,000 student registrations are expected over the next seven years.

As well as a growing number of local registrations, levels of international students are also rising largely due to low tuition fees and the introduction of more English-language courses.

In the private rental market students pay on average between €310 per month for private student halls and €360 per month for solitary rooms and flat shares, while on the social housing market levels are lower, averaging at just over €200 per month.

In Amsterdam monthly rents in the private market exceed €450. As the capital city, Amsterdam has the highest number of students and universities in the Netherlands, accounting for 23% of the country’s student population, followed by Utrecht (13%) and Groningen (11%). Knight Frank has put Amsterdam at number 10 in a list of investment destinations in Europe, but the adviser warns against complex regulations, which govern developments.

AM develops Villa Mokum in Amsterdam AM is to build 627 studios for students as part of the Amstelcampus urban development. 279 of these will be rental units owned by Syntrus Achmea. The remaining 348 units are units for sale. These units are 28m2 to 33 m2 in size. The sale prices range from €134,000 to €144,000 including a long-term ground lease. AM is targeting parents of students to finance the purchase of the studios, making them not only a good place to live for their sons and daughters, but also an interesting long-term investment. BAM Utiliteitsbouw is the project’s construction partner.

Verweij Mungra Real Estate is developing two student housing complexes on the south side of Amsterdam under the brand name Student Experience. Ravel Residence will be the first of these and located in the Zuidas area. The 820 rooms will be 21m2’s and include private bathrooms and kitchens, with rents at €485 per month excluding service costs (around €120), and furnished rooms at €575. The building will include a grocery store, laundry facilities, bike facilities, a roof basketball court, roof gardening, an employment agency, and a café. It is due to open in 2014. Their second Student Experience complex, AmstelHome, is planned to open a year later.

Syntrus Achmea Real Estate invests in massive development in Leiden (Y)ours Leiden is a development in the University City of Leiden, the Netherlands. When the city announced a tender for a plan encompassing a minimum 1,000 student units, Syntrus Achmea Real Estate & Finance teamed up with VORM Ontwikkeling, Ballast Nedam and DUWO to over-deliver on the city’s expectation. 1,900 student housing units are in planned, with 600 already under construction.

Syntrus Achmea is investing a total of between €40 - €50 mln in the project, and buying 25% of the student units. They are expecting yields of around 6%. “This could have been better, but as student housing by definition falls into the social housing category, we have to deal with the rules and charges that the government imposes on us”. But despite these risks and limitations, student housing is still an interesting real

estate category. Syntrus Achmea is looking for additional student housing investments. “We are currently looking in Utrecht, The Hague and Amsterdam,” Giel van Wijk of Syntrus Achmea says.

Syntrus Achmea is one of the largest institutional investors in the Netherlands with a portfolio of over €60 bn, of which €14 bn in real estate. Student housing is a relatively new category that Syntrus Achmea stumbled upon in 2009.

Currently the volume of student housing is relatively small, so it is part of the residential real estate category. “But” Van Wijk adds,“this asset class performs quite differently from other residential real estate. So if it becomes a larger share of our portfolio, we might consider making it a separate asset class, just as we did with health care real estate.”

“We are not just creating student housing, we are creating a neighbourhood, including regular housing, a supermarket, and a gym”.

Giel van Wijk, Syntrus Achmea

COUNTRY SPOTLIGHT

NETHERLANDS

COUNTRY STATS Student population: 670,000

Top institutions

Germany (62%) China (7%) Belgium (4%)

Leiden University Utrecht University Wageningen University

(% of international students)

%International: 10% Typical Domestic Course Fee: £150 (€180)

Top countries of origin

(Times World Rankings)

National student housing Average weekly rent in student accommodation: provision rate £85 (€100)

(17%)

Source: Savills World Research

53 (Y)ours, Leiden, The Netherlands

INVESTMENT SPECIAL

Italy Opportunities in Italian student housing market Student housing is emerging as an attractive alternative property investment opportunity in Italy, according to a survey by UK-based advisory firm Savills. The big cities in Northern Italy offer a particularly attractive – and untapped investment market in Europe. At just 2%, the student housing provision rate in the country – defined as the total places in student halls over the total number of student registrations – is the lowest on the Continent. Knight Frank has put Milan on number nine in the top 10 investment opportunities in student housing in Europe.

Private investor involvement in the sector is however still very limited, noted Marcus Roberts, Head of Student Investment at Savills. With prime yields for student housing hovering at around 7%, they remain attractive compared to the other sectors in the market, he added.

Overall, 65% of Italy’s student halls are located across Lombardy, Emilia Romagna, Tuscany and Piedmont, where almost 40% of Italy’s students are concentrated.

International students are also providing a major boost to the sector. The number of foreign students in Italy has grown by 121% over the past decade with more than half of new international students arriving from non-Euro countries, including 20% from Asia. About 50,000 student beds are currently managed by the universities (7%), regional authorities (80%) and private colleges (10%). This supply reflects an average student housing provision rate of only 3% and satisfies less than three-quarters of demand from intraregional and foreign students, Eri Mitsostergiou, Savills’ European research director, said: “The development and ownership of assets is mainly in the hands of universities and regional authorities but we do not expect any significant new supply to come from the public sector in the near future, creating an opportunity for national and international investors and developers.“ Fabrica on the prowl for investments in Italy Rome-based fund manager Fabrica Sgr is on the prowl for further student housing investments for its recently launched Erasmo property fund. In an interview with PropertyEU, CEO Marco Doglio said the company is studying a number of potential projects near the northern Italian universities of Milan, Venice and Bologna as well as in the south of the country. “We are looking for new projects both to increase student facilities and to stimulate the local economies,” Doglio said.

Fabrica Sgr has around €2.4 bn of assets under management across 10 funds. It is controlled by construction group Caltagirone and bank Monte Paschi di Siena. In February, Fabrica launched Erasmo, Italy’s first investment fund dedicated solely to student housing. The vehicle is targeting a total size of €300 mln and has a life of 18 years.

The fund recently carried out its first deal with the acquisition of a site in Turin, where it is developing a total of 600 beds at

54

Via Caraglio near the city’s iconic Mole Antonelliana building.

The investment is expected to amount to a total of €25 mln and delivery is scheduled for 2015.

The unit holders of the Erasmo fund are the Italian public pension fund INPS, through the Aristotele property fund, also managed by Fabrica, and CDP Investimenti Sgr, a subsidiary of state-owned institution Cassa Depositi e Prestiti (CDP).

CDP in particular is participating with at least a 40% equity contribution as part of its mission to finance social housing projects in Italy.

Doglio said that Erasmo is now open to other stakeholders such as pension funds, universities and bank foundations, both in terms of cash and asset contributions. Fabrica has nearly 10 years of experience in the student housing sector.

COUNTRY SPOTLIGHT

ITALY

COUNTRY STATS Student population: 1,800,000 %International: 3% Typical Domestic Course Fee: £1,200 (€1,400)

Top countries of origin

Top institutions

Albania (20%) India (8%) Nigeria (7%)

University of Milan University of Milan Bicocca University of Trieste

(% of international students)

(Times World Rankings)

National student housing Average weekly rent in student accommodation: provision rate £64 (€75)

(2%)

Source: Savills World Research

Spain Spanish youth turn to education With Spain’s youth unemployment at record-high levels, many of Spain’s youth are turning to education to increase their qualifications. Student numbers are on the rise. The Spanish student market is one of the largest in Europe, and has low rates of purpose built student housing. Spain’s universities are attractive to a growing market of international students from Spanish speaking countries in Latin America. The economic and debt crisis is however also affecting student housing developers and resulted in an 80% decrease in student housing completions over the last three years, according to Savills World Research. The market is however seeing interest from international investors and private equity funds. UK-based Knightsbridge Student Housing recently acquired a property in Madrid, and local operators RESA and Melon District are expanding as well.

COUNTRY SPOTLIGHT

SPAIN

COUNTRY STATS Student population: 1,900,000 %International: 3% Typical Domestic Course Fee: £700 (€800)

Top countries of origin

Top institutions

Colombia (10%) Peru (8%) Morocco (6%)

Autonomous University of Barcelona University of Barcelona Autonomous University of Madrid

(% of international students)

(Times World Rankings)

National student housing Average weekly rent in student accommodation: provision rate £78 (€92)

Source: World Research Source:Savills Savills World Research

(8%)

INTERVIEW

Azora: close links to universities Azora is a Spanish asset management firm with over €2.3 bn in assets with a strong focus on student housing. It currently manages close to 8,000 units across Spain under the RESA brand. This makes Azora the largest operator of student housing in Spain. Its model is to work closely with universities to create accommodation that is tailored to the specific needs of their students. Christina Garcia-Peri, Managing Director - Business Devlopment and Investors Relations at Azora Gestión: “We plan to reach 14,000 units in the next five years. We believe that our unique concept (affordability and close links to the universities) can fill an important gap in several European countries where most of the private new student housing developments are targeted to the more affluent students. We plan to expand into Germany, Italy, the Netherlands, Nordic countries and Eastern Europe as a priority.” Azora is looking to cooperate with other players in the market across Europe.

“Spanish market becoming more competitive” Melon District is a Barcelona based student housing provider, looking to expand into other countries. The Class of 2020 spoke with Managing Director Fabien Mollet-Viéville about their plans for Spain and abroad.

More competition, focus on brand identity “The student housing market is becoming more competitive.

Newcomers to Spain are busy building new student residences or refurbishing old ones to position their brands,” Says Mollet-Viévielle “Melon District entered the Spanish market in 2007 with a simple idea: to offer a product that is the ideal combination of a student residence and a shared flat.”

“We defined high standards in order to position ourselves in the market with our premium student residences: swimming pool on the roof, 24-hour multilingual reception, very high speed Internet, a resident assistant, in-house events (such as cooking classes, and open air movies). Students or young tourists can stay in our residences from 1 day to 1 year. From the beginning the idea was to grow Melon District into a chain of student residences in various countries. In our expansion plans we’re not only standardising our brand, but also our values, know-how, procedures and ways of operating.”

Melon District’s Reservations and Booking Centre is located in Melon District’s corporate offices in Barcelona. All the booking systems, IT programmes and software have been developed to allow interaction with future residences outside of Spain from our head office in Barcelona.

Expanding internationally: France and Italy Mollet-Viéville: “We are targeting 3 main markets: Spain, France and Italy. We currently operate 600 rooms in Barcelona and we’re looking to enter the Madrid market soon. Our first Parisian residence, Melon District La Défense (200 rooms), will open in 2015. And we are actively pursuing opportunities in Italy, especially in Rome and Florence.”

Fabien Mollet-Viéville

International challenges “The challenges of going international are mainly with the local authorities - they can be complicated to deal with, particularly when it comes to obtaining licences: construction, operations, and so on. But we have a very international team who all speak many languages and most have lived in our target cities.”

Investment opportunities “For each new student residence we are talking with local investors. These are often family businesses which acquire and develop the asset and lease it to Melon District on a longterm lease (>20 years). As student housing clearly has become an asset class in its own right, we are also being approached by more institutional investors and private equity funds. They are interested in both management and lease agreement.”

Melon DistrictJavaplein Marina, Barcelona Myplace Amsterdam

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INVESTMENT SPECIAL

France

Belgium

French market severely undersupplied Student accommodation is still very scarce in the French market and renovation of the existing stock has been a priority for the Ministry of Higher Education and Research for more than a decade. In 2004, a government plan for student housing development was launched for the renovation of 70,000 rooms in traditional residences as well as the construction of 50,000 new places for accommodation over a 10-year period.

Nevertheless, according to a report by property adviser CBRE, almost 80% of demand for student accommodation in public and private residences is left unsatisfied and recent estimates put the need for supplementary accommodation at 250,000 beds in the 15 largest cities in France. Based on this very high demand for student rentals, which continues to grow steadily, the residences on offer in the private sector have a real potential and are increasingly attracting the interest of investors who are researching alternatives to ordinary residential investment assets. The huge potential of the sector has already drawn a number of major French institutional investors such as Campuséa in the Gecina group and Viveris REIM.

Home Invest buys Belgian assets for €34m Listed property company Home Invest Belgium acquired the Louvimmo portfolio of mixed-use assets in the Belgian university city of Louvain-la-Neuve earlier this year for €34.4 mln. A large chunk of the project comprises residential space primarily let as student accommodation.

Gecina grows with Campuséa brand Gecina is a French real estate fund with over €11 bn in assets listed on the Euronext stock exchange. It is one of the largest dedicated real estate funds in France. Gecina has in recent years moved into the student housing market with its brand Campuséa. It develops, owns and manages its own properties, located in Lyon, Bordeaux, Lille and Paris. “We aim to have 5,000 units in operation by the year 2015, which represents a significant development pipeline. We want to be the firstranked institutional investor in the student housing field in France by 2015 in terms of assets owned and managed,” says Baudoin Delaporte, Director Real Estate Investment at Gecina. “Student housing should represent around 5% of the group’s portfolio in the medium term.” One of its strategies is to convert empty office buildings into student housing, as demonstrated by its project in the 15th arrondissement in Paris. Gecina is participating in The Class of 2020 conference to share its views on this new asset class, and discuss new investment or co-investment opportunities in France.

COUNTRY SPOTLIGHT

%International: 12% Typical Domestic Course Fee: £150(€180)

Top countries of origin

Top institutions

Ecole Normale Superieure, Paris

£73 (€86)

Source: Savills World Research Source: Savills World Research

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Philip Vroninks, head of capital markets at Jones Lang LaSalle Belgium, noted that the transaction confirms the trend that institutional investors are increasingly looking at student accommodation as an asset class in its own right. “We expect to see more deals like this in the future,” he said.

COUNTRY STATS

Morocco (11%) China (10%) Algeria (8%)

Average weekly rent in student accommodation:

Home Invest Belgium acquired the Louvimmo assets in a ‘right-to build-deal’ which expires in 2026. At this time UCL can choose to pay an indemnity at market value for the properties to be transferred back to the university or grant the owner a further long leasehold of 49 years, until 2075.

Gregory Martin, managing director at Savills Belux, said at the time that the transaction was announced that the Louvimmo assets are “excellent, fully let mixed-use properties in the city centre.” “They are closely linked to the busy university which is one of Belgium’s largest with over 27,000 students. The high level of interest that we obtained for this asset reflects the increasing diversification trend that is present with many investors.”

BELGIUM

COUNTRY STATS (% of international students)

Université Catholique de Louvain (UCl) is Belgium’s largest French-speaking university and owns all the land in Louvainla-Neuve, which is located 30 km from the Belgian capital Brussels.

COUNTRY SPOTLIGHT

FRANCE Student population: 2,300,000

In total, Louvimmo comprises three fully let buildings covering some 23,130 m2 , divided into residential (40%), retail (36%), office and auditorium space (24%).

(Times World Rankings) Ecole Polytechnique, Paris

Student population: 450,000 %International: 8%

Universite Pierre et Marie Cure, Paris

National student housing provision rate (11%)

Typical Domestic Course Fee: £340(€400)

Top countries of origin

Top institutions

France (31%) Netherlands (18%) China (5%)

KU Leuven Ghent University Universite Catholique de Louvain

(% of international students)

(Times World Rankings)

National student housing Average weekly rent in student accommodation: provision rate £56 (€66)

Source: Savills World Research Source: Savills World Research

(11%)

Award winner: Student Residence, Paris, France Award: Civic Trust Award 2013: Commendation award Architect: LAN Architecture Project size: 143 rooms Typical room: 18m2 , private bathroom and kitchen

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MUTUAL BENEFITS DRIVE HOUSING PARTNERSHIPS Major differences exist between how universities in European countries get involved in student housing. In the UK and the US it is common for universities to offer on-campus housing owned and operated by the university. These universities are now seeking partnerships with the private sector to meet growing demand. And this might be exactly what the private sector in Europe needs to encourage institutional investors to step in.

More and more professional property companies are opting to build and rent purpose-built units directly to students.

These are called ‘direct let’ models. This model requires a solid understanding of the student market, as the owner takes all the occupancy risk. This risk applies to both nonprofit organisations and for-profit owner/operators of student housing. And as more providers enter the market, the risk grows.

In continental Europe, most universities do not have this ‘living on-campus’ tradition. If at all, student housing was provided by non-profit organisations supported by the universities. Usually, European students live in residences not affiliated with the university. These rooms are often owned and operated by landlords managing a few flats or small buildings. Purpose-built student housing used to be the domain of universities and non-profit organisations linked to them. Universities that own and operate their own on-campus student housing act as developer, owner and operator, taking all the financial risks.

Referral: the university agrees to refer their students to the property of the housing provider. Universities may negotiate a reduced rent for their students, or receive a nominal fee per rental contract. The housing operator remains responsible for vacancies.

There is no denying that universities and student housing are closely linked. As they realise that this is an essential part of the student experience, a growing number of universities have been guaranteeing first-year students a room. But with limits on capital, universities prefer to focus on their core business: running education and research programmes. So for new student housing schemes, they are looking for specialised partners.

University boards are keen to reduce balance sheet pressure, so engaging independent student housing providers to build and/or manage their on-campus student housing is an interesting option. And those universities with limited land ownership need to meet their student housing demands off-campus. Both such on- and off-campus arrangements are based on a nomination agreement. Universities guarantee the rental income for the owner by sending their students directly to them as part of student housing packages. Some universities even make a small profit, charging students a slightly higher rent than that negotiated with the private owner-operator.

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Partnership Models Forming a partnership with a university can be an attractive option for builders and owners who seek low-risk operational models for their financial backers. At the same time universities reduce development and operational risks. The level of involvement for both parties can vary and may fall into these models:

Affiliation: this is a more formal arrangement in which the university and housing provider work together on operational issues, such as pricing and placement of students. The university sends its students to the property of the housing provider as if it were its own. The property might be located on land leased to the housing provider by the university, and the university may offer some guarantees to the housing provider.

Structured partnership: the university and housing provider enter a formal partnership and start a joint non-profit operation that is responsible for owning and operating student housing. This transfers the risk to a foundation in which both parties share control.

The optimal type of partnership may vary per programme and locality. Much depends on a range of local conditions including regulatory aspects. As universities throughout Europe are incorporating housing into their academic repertoire, an increase in partnerships with private housing operators can be expected in the coming years.

University partnershipmodels models University partnership HOUSING OWNERSHIP

HOUSING DEVELOPMENT

HOUSING OPERATIONS

RENTER GUARANTEE

UNIVERSITY PARTICIPATION

University

University

University

High

High

STRUCTURED PARTNERSHIP

Shared

Developer

Varies

High

Medium/High

AFFILIATION

Developer

Developer

Varies

High

Medium

REFERRAL

Developer

Developer

Developer

Low

Low

DEVELOPER DRIVEN

Developer

Developer

Developer

None

None

UNIVERSITY DRIVEN

Source: Based on models

by The Scion Group by The Scion Group Source: Based ondeveloped models developed

Partnership models between universities and housing providers offer varying degrees of shared responsibilities and risks.

59 The Fizz, Berlin

LETTER FROM SWEDEN

By Martin Johansson

Rent regulation is a much-discussed subject in Sweden, but not in relation to the student housing market. Currently, Swedish regulations allow newly-built properties to be free of rent regulation for the first 15 years This means that it is easier, in theory, to cover the relatively high costs associated with housing construction generally, and smaller student housing units specifically, with higher rents. So the problem with Swedish student housing is therefore not rent regulation.

It is that students cannot afford this new housing stock. To cater for them, the industry needs to focus on issues that can make construction of student housing with student-friendly rents possible.

Compared to other countries, the student housing market in Sweden is quite unique. Swedish universities may not own student housing. Instead, companies and foundations provide this, operating on the market as any other housing corporation. Another difference is there are no government subsidies nor special regulations covering student housing; with the exception that student accommodation can be built with slightly smaller units than normally prescribed.

Smaller units require regulatory reform As students have difficulty paying higher rents, the construction of student housing has been close to nonexistent. Therefore the focus needs to be on lowering rents by building smaller student housing units. Smaller units means lower construction costs and more units can be built into every housing project, which improves economic viability.

This would mean an immediate increase in construction, with rents better-suited to student incomes. It would also mean the Swedish market would be more interesting to foreign investors and developers.

To be viable, the units would need to be around 15 m2. But this is where Swedish regulations step in. The raft of detailed regulations requires that the smallest studio apartment possible is around 20 m2. Sadly, the authorities in charge have denied requests to change these regulations.

Losing international students There is, however, another possible way forward - increased involvement from the universities. Slowly the universities are starting to realise it is they that suffer if students are forced to study in other locations. Especially as non-EU students are now required to pay for their studies. This is otherwise free for Swedish, European Union, and exchange students. They have been losing 80-90% of their non-EU students - Sweden is no longer considered an attractive choice.

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There is a growing realisation that a very important part of the study experience is the students’ living experience. Although they still cannot own accommodation, universities can rent units to be in turn offered to their students. A few far-seeing universities see possibilities in commissioning accommodation from housing corporations. This they can market to their students at reduced rates, and although they would need to cover the shortfall in rent, it gives them the chance to recover the loss they would otherwise be making, should they lose students completely. Considering both economics and prestige, this shortfall is still considered worth it.

The unique regulations operating on the student housing market require unique measures, as Sweden is in need of 20,000 student housing units.

Martin Johansson is the Secretary General of StudentbostadsfĂśretagen (the Association of Student Housing Providers) in Sweden.

THE CHARM OF THE SMALL When wood manufacturer Martinsons, and AF Bost채der Real Estate asked Tengbom Architects to design a sustainable, smart and affordable way to meet student needs in housing, they sought the help of its future residents: students at the University of Lund. Together they came up with these units, measuring only 10m2 .

These units are currently being exhibited at the Virserum Art Museum in Sm책land, Sweden. In 2014, twenty-two of the units will be built, ready for students to move in. In order to do so, however, legal consent was needed -the legal minimum size for student housing in Sweden is 20m2 per unit.

This truly compact living space still offers a comfortable sleeping-loft, kitchen, bathroom plus a small garden with a patio. Extremely efficient layout and the use of cross-laminated wood as construction material has reduced costs by 50%. Its ecological impact and carbon footprint are also significantly minimised.

61 Credits: Tengbom Architects Photography: Bertil Hertzberg

LETTER FROM HOLLAND

University THE BIRTH OF THE CLASS OF 2020 Four years ago, in 2009, I sat down with Frank Uffen to express my surprise about the parnership narrow scope of the student housing shortage debate in The Netherlands. I read about talks taking place between Dutch student housing organisations and the local and national governments but I missed a broader vision, an international perspective on higher education and what it takes to build world-class student housing.

As an international company wishing to build and operate student accommodation in the Netherlands, I felt that I had value and network to add to the debate. We saw lots of opportunities. We saw growth of international higher education accelerate, creating a demand for new products and better service. We spoke with a number of other private investors eager to invest in student housing in the Netherlands. We shared a first-hand experience how local regulations made it nearly impossible to build and get banks and funders on board to enable our projects. I knew what our customers want and need, but without a change in rules and regulations the deadlock would never be broken. It was frustrating.

With this belief at heart we agreed to focus the first conference on a few important questions, which would help us find what needs to be changed to achieve our goals by 2020.

While sitting with Frank we both realised that the growing housing shortage was a direct result of a dated policy system destined to maintain the status quo. Dutch student housing policy was designed from the rules down, effectively disconnecting it from higher education and economic policy.

How and where could I and other private investors explain our business models and ensure that the regulations allowed our plans to happen? From my point of view as a foreigner I did not understand why we could not change a system that everyone agreed is not working and was preventing private development of student rooms in the country.

We made a non-profit platform where everybody could join.

No hidden agendas, all parties and sectors are welcome. We want it to be an open and transparent organisation, to share ideas and data, a platform where information is key with a real chance for change.

What we needed was an open and honest platform, which includes all who wish to contribute to the student housing market. A place where we could exchange ideas and data in a broader international context.

The Class of 2020 was born during this meeting. The idea was simple. We were going to create a platform were we would position the needs of the students at its heart. We decided to look to the future, 2020. We wanted to address issues, which would ensure the next generation of students having a better environment to live and study in. After all, does a student really care how their project is funded or what the underlying planning permission is? They only care about where it is and how much it costs, and what they get for their money…. and so they should.

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• Where does the Netherlands want itself to be positioned in 2020 with regards to higher education?

• What needs to be changed in the rules and regulations to enable a student looking for a room to have: • a wide choice in quality and price of rooms within their city of choice • no waiting list for local students • a market, which is all above board and legal without a black market

Our questions from the first year are still relevant, not only in the Netherlands but as we quickly learned throughout Europe.

I look forward to working with you on answering them before 2020.

Charlie MacGregor Co-founder, The Class of 2020, founder of The Student Hotel

THE CLASS OF 2014: TAKING IT TO THE NEXT LEVEL 2014 ambitions

What did we achieve in 2013?

This year we are looking to grow The Class of 2020 as the leading European platform for student housing and higher education professionals. Catering to growing interest from investors, universities, cities, developers and service providers we have launched a partnership programme.

With our partners we will continue to build and foster on a growing programme, focusing on network, expertise development and sharing best practices.

Our second year responded to a growing demand for student housing marketing information and network opportunities.

Here are some of the highlights:

• Market Reports: with our media partners we will launch a regular newsletter highlighting and summarizing trends and deals in the field of student housing.

• Education: The Class of 2020 will initiate and actively participate in events and conferences that will educate stakeholders about the opportunities in the student housing market.

• Network Events: several network events will be hosted in conjunction with international conferences and events.

• Academy: with and for our partners we will host and develop master classes dedicated to emerging topics. Preselected topics include university partnerships, valuation, operational excellence, branding & marketing, community driven technology and social media. Participants will be able to join on-site and online.

• Research & benchmarking: advances in financing, partnerships, sustainability and operational complexity have generated first conversations on developing research partnerships. With IPD we will develop a roadmap to a European student housing investment performance benchmark.

• Excursion: partners will be invited to join an annual excursion to see first-hand the most recent and innovative projects in Europe.

• International Board of Directors and Advisors: The Class of 2020 will establish an international board of directors and advisors to further enhance its quality programming and assure accountability. Interested professionals are invited to contact Gili Crouwel via gili@classof2020.nl.

• Annual Conference: investing in Student Housing: The second year of The Class of 2020 started on October 2012 with an international conference. The conference was attended by 225 participants representing five European countries, panels featuring 47 experts and supported by 13 partners and 5 sponsors. Conference reports are available online.

• Publication: our annual magazine celebrated a great number of new projects that opened in 2012, and highlighted the best university cities to invest in. It also featured ‘who is who’ in student housing. The publication is available online.

• Partner Excursion London: in May, all partners of The Class of 2020 were invited to visit some of London’s most innovative student housing schemes. London-based operators discussed design, toured the projects, and talked about the prospects of the European market and the growing importance of branding.

• Provada Round-table: The Class of 2020 was invited to Holland’s largest property expo to moderate a roundtable with Bouwfonds IM, DUWO Student Housing and the City of Utrecht during the Provada Student Housing Day. • STAY WYSE Round-Table Sydney: in September The Class of 2020 teamed up with STAY WYSE, a global association representing the youth travel accommodation industry. At the World Youth Student & Educational Travel Confederation Conference a roundtable was hosted to explore student housing trends around the world.

• Expo Real Munich: PropertyEU and The Class of 2020 announced its partnership with an interview at the ExpoReal 2013 in Munich and a special cover feature on student housing in the October issue of PropertyEU.

• Save the Date: the fourth annual conference will be held on 11-12 November, 2014.

• IPD Partnership: working towards greater transparency and accountability in the market, IPD joined as partner in October 2013 in oder to develop a European student housing investment performance benchmark.

Join The Class of 2020!

• Launch of Partnership Programme: The Class of 2020 announced a new partnership programme focused on building networks, exchanging expertise and best practices.

Increase your expertise, broaden your network and meet the leading players of the industry by supporting The Class of 2020 as a partner, supporter, sponsor or friend. Interested in the possibilities? Contact info@classof2020.nl for more information.

• Non-profit status: The Class of 2020 was registered as a non-profit foundation in Amsterdam in 2012. This status will assure its independence and allow it to grow as a professional platform for learning, exchange and network.

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LETTER FROM BRAZIL In the name of austerity European governments are slashing higher education budgets.

That is not the case everywhere. In particular countries in the Middle East, Asia, and South America are investing heavily in higher education and research. Student housing investors are following suit. By Juliano Antunes.

ULiving is the first company specialising in the development and management of student housing in Brazil. We have been researching the student housing market extensively throughout Australia, the US, the UK, France, Spain, Germany, the Netherlands, as well as in the home markets of South America.

The Brazilian government has been investing heavily in higher education. The foundation of new universities has increased the number of courses on offer and international exchange programmes, such as Science without Borders, are being promoted extensively to foreign universities. Coupled with this, courses offered in English have also been rising, attracting increasing numbers of students from abroad.

According to UNESCO, around 15,000 international students studied in Brazil in 2010 alone. Over the last 10 years the number of university students has steadily grown. Today we have around 7 million studying in Brazil.

Private institutions have also been investing in higher education. There has been a process of market consolidation through mergers and acquisitions by large educational groups, supported by private equity investment funds. Companies are offering more and more sophisticated products with

Federal universities Established 1808 - 2002 Established 2003 - 2012

better facilities and services. This is attracting increasingly demanding students.

Keeping pace with this growth is a demand for student housing. As this is still somewhat young in Brazil, ULiving is the first to specialise in this constantly developing and maturing market. Not only catering to foreign students, there is a very significant volume of domestic students looking for accommodation (approximately 17%) as they come from their parental homes to study in other cities. Despite a lack of transparency in disclosure (such as occupancy rates and standardised indicators), investment funds see that constant demand will ensure that the market is a profitable asset. The student housing market is attracting much interest.

Events like The Class of 2020 are very important for us to help identify the main issues at stake. We are in the process of aligning the interests of all parties involved and fostering our increasingly deeper understanding of this market.

Juliano Antunes is Managing Director of ULiving Brasil, and a civil engineer, specialised in Real Estate Development.

The investment in education is illustrated by the opening of new universities across Brazil in the last decade.

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A production of The Class of 2020 foundation Concept & production: Frank Uffen Text & editing: Wouter Onclin, Jacque Gilbert, Judi Seebus Research: Wouter Onclin Design: Jean-Paul Frans, Claudia Lucy SzelÄ…g, Bart Sasim Photography: Selected photos by Henny Boogert, www.imagesconnect.com Printing: Elco Extension, Amsterdam More information: info@classof2020.nl

November 2013

SAVE THE DATE

2014

NOVEMBER

11-12

THE CLASS OF 2020 IS MADE POSSIBLE BY THE GENEROUS SUPPORT OF: Partners:

Sponsors:

Institutional Partners:

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Real Estate Media Partner:

Education Media partner:

Supporter:

THE CLASS OF 2020 WORDT MEDE MOGELIJK GEMAAKT DOOR