WBJ: What is the reason for the growing investor interest in the purpose-built student accommodation (PBSA) sector?
Marek Obuchowicz: The PBSA sector may be an attractive alternative for real estate investors who have until now been primarily focused on more traditional asset classes such as offices or logistics. The office and logistics property markets are becoming increasingly competitive, with growing pressure on yields. PBSA is still a very young sector that offers relatively attractive yields to those investors who are able to accept the often-underestimated risks associated with entering this market.
How fast will the sector grow in Poland?
Difficult to say; for the time being, the sector is at a very early stage of its development, with new projects being in short supply. Investor interest is definitely there when it comes to both the acquisition of ready products and participation in the development of student accommodation projects.
How big is the existing supply?
Today, there are a total of fewer than 5,000 beds in private dormitories across Poland, which is enough to accommodate less than 0.5 percent of the country’s students. By comparison, in the UK the figure is close to 25 percent. In several key western European cities, the figure is admittedly lower – from 5 percent to 7 percent. Nevertheless, whichever benchmark you look at you will see there is still a lot of room for growth in the Polish PBSA sector.
Can students in Poland afford the accommodation offered by private dormitories?
Polish society has been getting increasingly affluent over the last decades. Besides, private dormitories are also targeted by the dynamically growing group of foreign students in Poland. Those students are accustomed to higher accommodation standards and the corresponding (slightly) higher fees, although it is worth pointing out that the rooms in Student Depot’s dormitories are often more affordable than those in the neighboring single-room apartments.
How do you compete with rental apartments?
From a student’s perspective, the main advantages of private dormitories include security, comfort and a sense of community. All of our buildings are controlled-access properties that conform to the latest safety standards. The room reservation process is very fast and easy, and you can complete it online, also in English, which is particularly useful if you are a foreign student. The units are fully furnished and include a private bathroom and a kitchenette. The common areas, including silent study and coworking areas as well as gyms and chillout zones, allow students to spend time with each other.
What are your development plans for the near future?
We currently have more than 1,550 beds in our dormitories, with a new project set to be completed in Warsaw’s Mokotów district in September, which will bring the number of beds to around 2,100. We have just launched construction works on a scheme in Gdańsk, which will be located within walking distance of the University of Gdańsk and will offer approximately 400 beds. That development will be ready in September next year. In the coming months, we will probably announce at least two new investments.
Do you have set targets when it comes to the number of beds you want to have?
We want to continue our gradual growth in the near future – the plan is to add from two to three new projects to our portfolio (which means a total of at least 1,000 beds) every year. We are constantly screening the market and looking for opportunities to acquire sites for new schemes.
Which cities are you looking at?
We are primarily focused on the largest academic centers across Poland, but we are not ruling out the possibility of investing in interesting locations in medium-sized cities.