Would it be better to buy a student room than rent one?
A student room opens up a world of opportunities. Your children won't have to cycle miles to their classes, they'll learn to live independently and, above all, they'll escape from your all-seeing eye. Unfortunately, these pleasures come with a price tag attached.
The Kotkompas (student lodgings survey) by property consultant Stadim shows that a student room in Belgium costs an average of €400 per month. However, there are major differences between the regions and between student cities. In addition, the quality of the student room itself (as well as its distance from the faculty buildings, whether it's located in a student neighborhood or not, the location of the room within the building, etc.) will determine how high the rent is.
What does a student room cost, on average?
|Student room with en-suite facilities||€3420||€3370||€3485|
You do the maths. Renting student accommodation for three years at €400 per month will cost €14,400. Five years will cost €24,000. And if you've got three students who all want to get their PhD in Brussels, you'd better have even deeper pockets.
The average rent for student rooms in Flanders has risen by 9% over the last 2 years according to the rent barometer of the Flemish Real Estate Confederation. There's a different story in Brussels – prices are under more pressure and have even fallen slightly over the last 2 years. No regional data on price trends is available for Wallonia.
So, should you just rush out and buy?
If you've got children who want student accommodation, it's definitely worth weighing this up. You won't have to pay rent, and once the children kiss the student life good-bye, you can rent out the student room. This way, you can recoup your investment, and even better, try to earn a return.
In any case, future demographic conditions are highly favourable for those investing in student rooms today. According to the Kotkompas from Stadim, around 40% of Belgian students currently live in student accommodation. The total number of students is expected to rise in the next few years from approximately 470,000 in 2020 to more than 600,000 in 2030, including 160,000 international students. The increasing internationalisation of university and college education is certainly a factor here. At the same time, more and more educational courses are being offered in English in our country.
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Points to consider when buying a student room
Buying a student room is an investment for the longer term. That's why it's a good idea to take a serious, in-depth look at the market beforehand. The following points are worth bearing in mind:
- The student cities are often the major cities where property prices have surged in recent years. You should also bear in mind that availability varies from one student city to another. Some cities are struggling with a structural or temporary shortage of student rooms, while others have a surplus.
- Buying a property and splitting it into student rooms used to be the path taken by most private investors. However, several cities no longer allow this, or only do so under strict conditions. This is because they want to prevent family homes from disappearing off the market.
- A beer crate to sit on and sharing one shower with 24 people? When you were a student, this was likely the norm. Nowadays, students demand more comfort. At the same time, you need to follow detailed legislation on ventilation, fire safety, general safety (e.g. no steep stairs) and minimum area requirements.
- Students come and go. Renting out one or more student rooms takes time and can be a hassle. Maintenance and repairs are also part of the equation.
- Professional players have moved into the market in recent decades. In addition to these private players, there are also many universities and colleges who own and manage a large number of student rooms. So, as a private investor, you're not the only one looking for opportunities.
- During the lockdowns, many students quit their student accommodation and used their room at home. The extent to which online learning will continue is still up in the air, which is another consideration when buying a student room. It is quite possible that students will increasingly be looking for flexible rental options rather than fixed contracts.
What opportunities exist for investing in student rooms?
Student rooms come in all shapes and sizes.
One option is several student rooms that are offered for sale as a single investment property. That can make it a large investment. Of course, you can also opt for alternatives such as a single studio or a small apartment.
Another option is to buy a room off a new-build or an investment project. For a room in a new project, allow between €110,000 and €200,000, depending on its location, finish and so on. The return is somewhat lower (2-4%) than a room that you manage yourself (4.5-5.5%), because a third party takes responsibility for managing maintenance and rentals.
You can also invest in student property without bricks and mortar (and without students). This can be done by investing in a listed real estate company, which in turn invests all or part of its assets in student facilities. Xior is the best-known to Belgian investors, known as the 'student landlady' of the stock exchange. However, there are also other real estate players in the student segment, both within and beyond the borders of Europe.
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This article does not contain any investment advice or recommendation, nor a financial analysis. Nothing in this article may be construed as information with a contractual value of any sort whatsoever. This article is intended for information only and does not constitute in any way a commercialization of financial products. Keytrade Bank cannot be held liable for any decision made based on the information contained in this article, nor for its use by third parties. Every investment entails risks such as a possible loss of capital. Before investing in financial instruments, please inform yourself properly and read carefully the document "Overview of the principal characteristics and risks of financial instruments" that you can find in the Document centre.