Over the next decade, the European student population is set to grow exponentially, with an estimated 8 million students to be enrolled in post-secondary institutions across the continent by 2025. This increase in enrollment has created a higher demand for student housing in many countries in Europe.

Currently the United Kingdom is the leading country in terms of student housing accommodations and investment, followed by Germany and France. As the student housing market continues to mature, investors are starting to look at new countries in which investment opportunity lies. This begs the question, what countries in Europe hold the most investment potential for student housing?

Two good indicators of the demand for student housing are the student population and the student housing provision rate. The provision rate is calculated by taking the number of student registrations and dividing it by the total number of places in student halls (purpose-built student housing). Here’s a snapshot of the top 10 European countries, according to highest student enrollment rates in 2013 (Savills, European Student Housing).

1.     United Kingdom:  2,500,000 students, 21% student housing provision rate.

2.     Germany:  2,400,000 students, 11% student housing provision rate.

3.     France:  2,300,000 students, 11% student housing provision rate.

4.     Spain:  1,900,000 students, 8% student housing provision rate.

5.     Italy:  1,800,000 students, 2% student housing provision rate.

6.     The Netherlands:  670,000 students, 17% student housing provision rate.

7.     Sweden:  460,000 students, 23% student housing provision rate.

8.     Belgium:  450,000 students, 11% student housing provision rate.

9.     Austria:  360,000 students, 16% student housing provision rate.

10.   Switzerland:  250,000 students, 11% student housing provision rate.

Without any uncertainty, the greatest investment opportunities for student housing in Europe are within university towns that have a relatively low student housing provision rate, a high student population and higher student rental rates.

This graph from Savills also shows specific cities across Europe with the highest investment potential according to the market strength, student rental rates, provision of student housing and student populations. Based on this information, the following 10 cities hold the most opportunity in each country:

1.     United Kingdom:  London

2.     Germany:  Darmstadt

3.     France:  Paris

4.     Spain:  Barcelona

5.     Italy:  Milan

6.     The Netherlands:  Utrecht

7.     Sweden:  Lund

8.     Belgium:  Ghent

9.     Austria:  Vienna

10.   Switzerland:  Lausanne

While these top 10 cities hold the most potential, there are a few other cities that also rank fairly well including: Zurich (Switzerland), Leiden (Netherlands) and Mainz (Germany). Any city that has relatively high student rental rates and a high student population, in culmination with low provision of student housing, poses to be an area ripe with student housing investment potential.

There are some other factors to consider before investing in the student housing market, which vary on a national level. For example, in certain countries like Spain and Italy, students have a high propensity to live at home with their parents during their academic career. As well, in other countries there is limited investment potential in terms of location. For example, the only lucrative market for Spain is in Barcelona, and for Italy is in Milan. This kind of information is important to consider before investing in the student housing market, as it can affect both demand and rental prices.

The countries with the highest rental rates are as follows:

1.     United Kingdom (£117/week)

2.     The Netherlands (£85/week)

3.     Switzerland (£81/week)

The countries with the lowest rental rates are:

1.     Germany (£48/week)

2.     Belgium (£56/week)

3.     Austria (£58/week)

While the UK is certainly dominating the European market in terms of student housing investment opportunity, it’s a reasonable assertion to contend that other European countries will soon catch, as student populations grow nation-wide.

Click here to see the full European Student Housing Report by Savills.