Student Housing in Italy: Context, Policies, Challenges, and Opportunities
After overcoming the uncertainties linked to the pandemic by COVID-19, Italy’s student housing sector — much like almost everywhere else in Europe — has returned to denounce the substantial gap between demand and supply for quality housing services.
In the geographic context of Europe, the highest housing availability is recorded in the United Kingdom, where the ratio of beds/students exceeds 30%, while the Italian value is around 4%. Milan and Bologna offer the highest rate among the Italian university cities, with about 7-8%. On the other hand, the provision rate in Rome and the main southern university cities is even lower than the national average. The number of Italian university students has continuously grown in the last five years, reaching 1.8 million units (in A.Y. 2020/21, despite the pandemic, the annual increase was 4%1). At the same time, even international students (Erasmus) who decided to study in Italy have steadily increased, recording 29.000 new mobile students2.
Promise on the Horizon
Although historical events show an anti-cyclical trend, whereby periods of economic recession fuel low access to university education, the increase in enrolments and the weak, virtually unchanged availability of student housing on the national scale open attractive investment opportunities for the sector. In recent years, in addition to institutions, many investors and private developers have been active in trying to develop quality structures even though this unsatisfied demand remains at over 500 thousand beds.
Significant interventions are underway in the main Italian cities, Milan, Rome, Turin, Bologna, and Florence, which alone host about 40% of the total university students. At the same time, a strong interest is increasing in smaller university cities such as Trieste, Verona, and Ferrara. with a constant positive trend.
The presence of three main distinct players characterises the Italian student housing sector:
- Private landlords, who propose housing solutions for rent.
- Institutions, that promote interventions for temporary hospitality within the right to study.
- Private investors and developers, that act according to the rules of the free market and often seek innovative solutions.
The primary and most widespread answer to the vast current gap between supply and demand is therefore found in the private rental market. Private landlords lead the national supply of student accommodation and are frequently preferred because of the opportunity for more privacy and independence, especially for those enrolled in after the first academic.
Policies in Play
Institutions are represented by universities, state institutions of higher artistic and musical education, colleges, student cooperatives, organisations, foundations, and non-profit institutions that can be supported by National Law No. 338 of 2000: "Provisions on housing and residences for university students." This Law provides public co-financing for student housing construction with specific national Calls.
In the last of five calls, the governmental co-finance can cover up to 75% of the total cost, admitting specific types of intervention (maintenance, renovation of urban areas and buildings, restoration, refurbishment of existing buildings, energy efficiency or improvement, demolition and reconstruction, etc.). This funding formula fostered an expansive renovation of public hospitality models, the mandatory introduction of significant spaces, services, and functions for study, sociality and leisure and the substantial increase of the national institutional offer, with a total addition of over 38,000 new beds.
In addition, according to the objectives of the National Recovery and Resilience Plan, Italy should bring the current, the current 44.000 beds in university cities to 100.000 by 2026. This provision will be supported by the definition of new measures and rules aimed at the involvement of investors and specialised private operators, aligning the national bed supply with international standards.
The Situation on the Ground
Investors and private operators are represented by both national and international companies, such as The Social Hub, Camplus, CampusX, Hines, AXA, etc., just to mention the most well-known brands. Many of these companies are international real estate fund operators, whose strategic role is to try to find more attractive solutions by offering quality accommodation and services, which adapting to the demands of young people today.
These residences are generally part of the portfolio of a real estate investment fund, which - through its management company (SGR) - deals with all aspects related to investment development, mitigates risks (administrative, environmental, legal, etc.) and coordinates the parties involved in the structuring of the operation and implementation of the asset.
These new buildings are then leased to a specialised operator who manages the structure and returns rent to the fund, typically guaranteed by a surety, minimising the investor's rent risk. The operator is usually involved right from the design stage to create the most suitable product for the target audience and the city where the intervention occurs. In these cases, the investment fund becomes the tool that effectively manages all the critical processes: from the research phase and market analysis to developing the property to its management. The operators' actions are implemented in general terms of return risks and opportunities (see below).
1) Slow and weak Public-institutional system; mainly caused by a) excessive regulations and bureaucratic load (times and methods for issuing building permits), b) lack of certain times of civil justice (in case of legal disputes), c) lack of effectiveness and continuity over time of government actions (instability of political and administrative framework), d) heavy tax burden, e) low flexibility of the labour market, etc.
2) Weak ability to attract foreign investment; Italy ranks eighth in the top ten world economies ranking with higher attractiveness of foreign investments, ahead of Russia and Brazil, and not far from Great Britain decreased from fourth to seventh place, as a result of Brexit negative perception.
3) Lack of a specific, recognised, and attractive investment class; added to the heterogeneity of the actors involved, which leads to a fragmentation of investment governance and a shortage of tax, bureaucracy, and urban incentives.
4) Strong quantitative demand that threatens to yield to speculative logic; creating structures "hive”, with low attention to sociality and the real needs of students.
5) Low propensity of the sector to research and innovation, especially in building materials and technology, services, and support equipment for temporary hospitality.
1) Presence of an articulated and extensive education system; 257 Schools for tertiary education, 98 are universities, while the remaining AFAM - Artistic and Musical Higher Education. The university city with the largest number of schools is Rome (32), followed by Milan (21), Florence (12), Turin (7) and Bologna (7). Among the Universities, 11 are telematic (6 of these are in Rome) and 4 are Polytechnics (in Marche, Milan, Turin, and Bari). Some of these institutions are among the oldest in the world.
2) Strong attractiveness of university cities for young people; due to: 1) the quality and the different possibilities of urban connections (both on a regional and national scale), 2) the different opportunities for leisure and entertainment, and 3) the wealth of historical, cultural, and naturalistic heritage in all Italian University cities (Perugia, Ferrara, Padua, Pavia, Milan, Rome, Florence, Palermo, Naples, etc.).
3) Good quality and positioning of the national university system; combined with a lower cost of education and high quality of life, compared to other major European cities and according to international rankings.
4) The increasing number of English language courses and international exchange programs; attracting a growing number of Erasmus and International students (about 29,000 in 2019).
5) Growth of non-resident students and steady increase in enrolments; his perspective is combined with the opportunity to guide new investments to a strong economic and financial sustainability, favouring diversification in terms of target users (not only mobile students but also young professionals, city users, etc.) and flexible terms of the rent (short-term, medium-term, and long-term).
6) Opportunities for investment growth thanks also to the support of public funds (L.338/00 and PNRR); supported by the firm and widespread presence of international and national operators with possible activation of innovative mechanisms of public-private collaboration, following the Recovery and Resilience National Plan, Next Generation Italy.
Student housing in Italy remains a rising asset class with a solid social vocation. It aspires to put young people and their future at the centre of development, creating inclusive, social, and environmentally sustainable residences with careful management and aimed at creating value in terms of human capital and urban development.
Students are a source of wealth for the country and investing in their educational path is essential An educational path which very often reaches levels of European fame and excellence. Moreover, universities offer increasingly specialised and cutting-edge study programs, attracting national and international students. This growth needs to be supported through effective tools for finding accommodation with all-inclusive services and management, as well as comfortable environments that favour the creation of synergies and moments of individual growth. Hence, the need to also offer services and spaces of adequate architectural and functional quality to promote sharing moments of study, community, and leisure.
The future of student housing in Italy seems increasingly linked to the need to build an ethical pact with cities, public bodies, policymakers, stakeholders, private-profit and non-profit organisations and universities. All for the sake of encouraging the realisation of urban infrastructures, spaces, and increasingly liveable places, aimed at building the relationship between students and the construction of social capital.
The private market continuing to respond quickly and quantitatively also needs better responses, especially in terms of greater public-private collaboration and experimenting with new models that can strengthen these structures' human, social and territorial potential. Furthermore, only through the synergy between finance, innovation, environment, and sociality will it be possible to be competitive internationally and obtain long-term benefits for the young generations who are planning their future.