Student housing in Italy is not regarded as an asset class, while in other countries across Europe it is. Why not? Can it be? Urbanpromo Housing Sociale’s second Friday morning session was dedicated to answering these questions. Two speakers introduced student housing in Spain and France, followed by a panel discussion focusing on the Italian case.
There is a need for student housing in Italy
Moderator Stefano Gianni of CDP investments shared that recent research shows that 650.000 to 800.000 beds are needed to accommodate the students of Italy’s 89 universities. Unlike in the UK and USA universities in Italy are situated in city centers instead of on separated campuses. Student Housing therefore is mainly located in cities too, which makes organized planning of student housing rather difficult and expensive. The result is that student housing is currently very fragmented and part of the private rental market.
Spanish case: free land and the economy of scale
First speaker Thierry Igonin Leygue of Spanish housing provider RESA shares his experiences in developing student housing in Spain. Like in Italy, student housing is scarce and the market is fragmented. The 4 largest operators represent only 15% of the total stock. This is because developing student housing in Spain is extremely difficult. Students can only pay 500 to 600 euros per month for their home, while building codes and other regulation prescribe that units should be fully equipped. This forces operators to invest on average 40.000 euro per bed. Universities must provide land for free and the project needs to contain at least 200 beds for projects to become feasible. The speaker emphasizes the economy of scale. Only big, efficient back offices work. Operators need at least 2000 to 3000 beds to become efficient enough to cashflow and efficiently operate.
Attempts to apply the French and Spanish system in Italy
Next Jean Marc Deshaires of Italian investment company Icade tells about the model that is applied in France and how he tried to implement the French or Spanish model in Italy. In France, the government supports student housing by giving a tax cut. This is simply impossible in Italy so alternative ways should be found. Similar to Spain, the speaker Deshaires asked Italian universities and municipalities to provide land for free. The issue continued to be that they either had no land or came up with additional requirements that would make the project unfeasible. In the end he concluded that there is just no way of making student housing feasible. It is no asset class because students simply cannot afford their accommodation themselves and there is no way of bringing in capital or land by the universities or government.
But there might be a solution that is much closer to the way students currently find their accommodation. The speaker says that Italians are very smart people. He argues that the big difference between Italy and France is that in France everything is organized by the state and as a French person, you get used to everything being arranged for you. But because in Italy you cannot depend on the state, you need to do things yourself, which makes you smarter. So students stay a little longer at their parents place, make friends at university and rent a flat together. Deshaires therefore thinks that the future for student housing in Italy is co-housing.