Are private student dorms a new investment opportunity for Belgrade?

Affordable housing and student accommodation were the topics of the eponymous panel at this year`s REBEC conference, with a focus on Serbia and the Central and Southeastern Europe region.

The first panelist, Nikolaos (Nikos) Manomenidis, director of the real estate agency Crecos from Thessaloniki, talked about how the student accommodation market looks in Greece:

- It started with Jewish investors who invested a lot in Thessaloniki. The city has a long Jewish history, dating back to 1912 when a third of the population was Jewish. They invested in old buildings and turned them into student accommodation - said Nikos.

As assessed by George Bobvosch, Development Consultant at Wyndham Hotels & Resorts for South Eastern Europe, and in Central and Eastern Europe, especially in the capitals and university centers such as Warsaw, Prague, Budapest, the number of students has been growing rapidly over the past three decades.

- In the last 35 years, many medical faculties have been opened even today, we have about 70,000 foreign students studying medicine in this region. The cities I mentioned traditionally had two accommodation options: campuses within the university, and subsidies for students who had to seek off-campus accommodation. However, the number of foreign students has grown dramatically. Universities have begun to notice the market need and to approach developers, like us, in order to find sustainable solutions - Bobvoš stated.

- Because students need affordable housing. It`s not social housing, but it`s bordering on it - not luxurious, but not cheap and bad either. The accommodation has to be functional. It is often modeled after a barracks: long corridors, a series of rooms, a common kitchen and bathroom. As developers, we`ve found it to be a great business: stable, because it is easy to plan five to seven years ahead, then reliable, given that students (or their parents) regularly pay rent and cost-effective - in cities like Warsaw, Prague, Budapest, a decent rent brings a stable income. There is also a long-term lease that allows for predictable income.

- These are mostly single rooms with additional amenities. There are, of course, different models, depending on the desired level of comfort and price. For example, in an average 10-story building, the first eight floors are rooms with shared kitchen and bathroom facilities. The top two floors often have studio apartments with their own facilities. However, the price of a studio (with kitchen and private bathroom) can be 30-50% higher than the price of a regular room. It depends on the standard of the facility and the target group. In more luxurious accommodations in some non-EU countries, another advantage of such accommodation is that the student can obtain a residence permit through that facility. In many cases, the university or the facility owner will help with address registration and paperwork. This means a lot to students from distant countries, from China or Japan for example.

- For example, in London, in the Whitechapel district, the American developer, Great Star, built a student complex with a swimming pool, sauna, gym... very luxurious, fully furnished, but the target group are rich students from Asia (especially South Asia), who want premium conditions. In that case, the rent can go up to 1,500 euros per month. I doubt that something like that would be on the price here because that "strong" international component is missing. but there are also such cases here,

there are families coming from Asia and the Middle East, who are wealthy enough to buy or rent an apartment for their children in Belgrade. But to attract such families, good study programs, security, infrastructure and administrative flexibility are needed. Therefore, the potential exists, but work must be done at the academic and infrastructural level, not only through investments in student accommodation - Mitrašinović said.

- We still have a system dominated by local authorities to a large extent, which fully control student accommodation. Education is part of a wider social process and is good PR for the authorities, but when we talk about state finances, some bigger project would compete with other big infrastructure investments, and not everything can be financed and there are simply not enough funds to build quality student accommodation.

- In this context, private investments in the form of student apartments, i.e. remodeling of old buildings, can be meaningful - to breathe life into those buildings and eventually expand capacity, especially since there is a lot of land available - Mitrašinović believes.

- There are, historically speaking, three scenarios: you were lucky enough to come from a family rich enough to buy you a small apartment in the city where you study; parents could have helped you by paying the rent or, if nothing else, they could have contributed to the cost of the dorm. What has changed from a development perspective, however, is the fact that real estate prices have risen, and therefore there are fewer and fewer families who can financially support their children. In this light, universities could offer student accommodation as part of their service, which would increase the attractiveness of enrollment. Because it is not the same when someone from Čačak gets the opportunity to study at the University of Belgrade if there is also decent accommodation.

- Therefore, when an investor has land, he will more often use it for housing than for student accommodation - assessed Mitrašinović and added that this is why it is crucial for the state to regulate urban planning so there is an urban plan specific for student accommodation, because it would directly affect the price of land and the attractiveness of investment.

- There is no specific urban zoning for student accommodation. However, there is an interesting system in Greece since the 1950s called "antiparochi" - a system that arose due to the lack of mortgage loans. The owner of the land cedes the land, and the investor builds a building and gives the owner a part of the apartments in exchange, without buying the land.

- Today, there is also a state version of that model - "social antiparochi", where the state transfers land or abandoned buildings to investors which will build a student dormitory or affordable housing. Part of the apartments goes to the users (students or social categories), and the part is kept by the investor for sale or rental - he explained.

- It`s not the most elegant solution, but when the need arises to house several hundred people in a short period of time, a prefabricated building can be built that can be easily erected, dismantled and moved. They`re not aesthetically perfect, but they work. For example, medical students must be close to the university, so such prefabricated solutions make sense both locationally and financially. In Scandinavia, even wooden prefab structures are used, although it all depends on local regulations. Somewhere it is allowed, somewhere not.

- Life has never been easy. Today, it may be easier to feed ourselves, but our attention is scattered on consumption, and we forget to invest in ourselves and our family - concluded Nikos Manomenidis.