Leggett Market Comment February 2018 - Student Housing in France                    ... an immediate opportunity

Author: Christopher Smith, February 2018

The student landscape has changed dramatically over the last few years. Gone are the days when French students went to University in their home city or nearby and foreign students were a rarity. Now student mobility is the norm within the country, while France, like Germany, has made a concerted and successful effort to attract more foreign students.

France has a student population of 2.5m, the second largest in Europe, increasing at a rate of 3.2% a year. International students are now 310,000, around 12% of the total, and the government is targeting 470,000 by 2025 as French universities expand their offering – they now off er 700 courses taught in English and more are being planned.

The students arrive from all over the world, but the largest numbers come from China (over 25,000 a year), Morocco (25,000) and Algeria (17,000). The combination of French students being more willing to attend University in another part of the country and more international students arriving has led to unprecedented demand for student housing.

This has shone a spotlight on the imbalance between supply and demand. The market has traditionally been dominated by public operator CROUS, which has recently added some 40,000 beds, and by private players, who benefit from favourable tax incentives if they invest in student accommodation.

What is needed is more Purpose-built student accommodation (PBSA): well-located, contemporary, design-led buildings with excellent facilities such as gyms, communal areas, swimming pools and high-speed broadband that meet the requirements of increasingly sophisticated and demanding international students.

PBSA provision in France increased to 15.4% of the total last year, but it is still one of the lowest in Europe, and market experts say there remains a shortage of some 850,000 beds. PBSA meets the demands of students but is also a good investment, as an income-producing asset class with signifi cant growth opportunities. Investments in the sector increased byFebruary 2018, 245% to €170m in 2016 and are expected to have reached €250m last year: a big jump, but still below the €750m invested in Germany.

The UK led the way in student housing and it remains the largest and most mature market in Europe but now, partly due to uncertainty over Brexit, it has reached a plateau. France, by contrast, has just begun its upward trajectory, which is why more and more UK-based providers are looking across the channel and seeking to use their expertise in the nascent but fast-growing French market.

They are not alone. Student housing is now an established asset class and it is attracting interest from pension funds, institutions, sovereign wealth funds and private equity companies. The most recent deal in France was done by Harrison Street, a Chicago-based private equity firm. The biggest player in the French market is asset manager SwissLife.

Most projects in the pipeline are in Paris, which has the biggest student population of over 185,000, but other cities like Bordeaux, Lyon, Marseille, Nantes, Grenoble and Toulouse are coming up the ranks. The supply/demand imbalance is such that regional cities off er even more opportunities to developers and investors.

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A selection of the latest reports and guides on Commercial properties in France.


A Norton Rose Fulbright Guide. This guide describes the law and practice in France. Published in February 2016.


A guide by experts Deloitte which analyses the investment climate, operating conditions and tax systems.