Student Housing in Poland – a new horizon?

Whilst international political bickering and introduction of tariffs elsewhere in the world begs questions about the future world order, Poland continues its own journey forward unabated and with a progressively more mature and stable economy and clear vision of itself. A decade after the economic crisis and with retail and office sectors now well-established as well as a rising popularity in warehousing and distribution, there is a new focus on the broader residential sector – not only the private rental sector (PRS) but also purpose-built student housing accommodation (PBSA).

Poland playing economic catch-up

Although Polish demographics show an ever-so-slightly shrinking population currently teetering above 38 million, almost all other socio-economic factors for Poland are positive. Unemployment figures of below 4% and historic all-time low interest rates of 1.5% demonstrate how far the country has come since 15 years ago when roughly one in five were out of work and interest rates were above 5%. Over the same period average salaries have all-but tripled with the current average salary tipping the equivalent of 10,000 EUR per annum – still relatively low compared to Western European counterparts but also in itself a huge step forward and a large part of the country’s competitive advantage. S&P (A-) and Moody’s (A2) both forecast a stable outlook for Poland whilst inward investment continues to appear from even further afield with interest from the Middle and Far East as well as the US now competing with more traditional investors from Western Europe. 

Whilst much can be said for Special Economic Zones and tax-breaks aimed at luring foreign capital, if the truth be known Poland’s real asset is it’s workforce. A blend of discipline, work ethic and attention to detail that many major foreign employers in particular praise as reminiscent of belonging to previous Western generations of workers has perhaps not been the driving force behind the decision of multi-nationals to set up in Poland but more often than not has been the overriding reason for them to stay and expand. Poland’s universities are the engine-room churning out the well-educated, multi-lingual workforce that are the source of national pride and the envy of many in so-called more developed states. “Poland has a very young demographic profile, and the education level is very high,” noted Scott Newman, Senior Vice-President of State Street Bank in an interview explaining the success of the company’s growth to over 4,000 staff in the country.

A new trend afoot – purpose-built student accommodation…

An increasing number of students are enrolling full-time at the expense of part-time university programmes whilst there is a huge influx of foreign students flocking to Polish higher education establishments who often benefit from a lower cost-base for their time at university whilst still being able to follow an English-led syllabus. Previously ‘foreign students’ tended to be from the larger Polish diaspora but statistics show that nowadays a rapidly increasing number of students with no previous links at all to Poland are seeking to enrol. With most recent figures showing over 70,000 foreign leavers from Polish universities and applications from abroad growing by over 10% per year, it is forecast that the number of overseas attendees will exceed the significant milepost of 100,000 soon after 2020. Over 50% of foreign students come from Poland’s Eastern borders – namely from Belarus and Ukraine – but there are growing numbers emanating from Southern European countries such as Italy, Spain and Turkey whist the most popular cities in which foreign studies come to study are by far and away Warsaw and Krakow.

A large proportion of the foreign students and an increasing proportion of more discerning local students are not content to accept below par student digs and a new market is opening up in the form of purpose-build student accommodation in Poland’s major cities. Traditionally the majority of student accommodation have been in the public domain in unpopular dormitory-style facilities with shared washing and cooking facilities and whilst there is a major price differential between this standard and the newly-appearing privately-owned student houses, current occupancy results show that there is enough demand from aspiring students to absorb many more private initiatives.

From an investment perspective the only portfolio of size to show an exit so far concerns the purchase by Japanese investor, Kajima, of Oaktree’s interest in Student Depot where co-investor Griffin continue with their minority share. Already offering around 2,000 beds across 5 sites in Warsaw