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Why Ivanhoé Cambridge, Bouwinvest bet on Paris student housing

The two pension investors have teamed up with Greystar to develop purpose-built student housing in the underserved French capital.

Ivanhoé Cambridge and Bouwinvest Real Estate Investors see student housing as a sector with long-term growth dynamics and Paris as a market with untapped potential for the property type.

The two pension investors have formed a joint venture with US-based multifamily specialist Greystar Real Estate Partners to invest €1 billion in ground-up development of apartments catering to students and young adults in the Greater Paris Region.

This is the second joint venture that has included both Ivanhoé Cambridge, the real estate arm of Canadian pension investor Caisse de dépôt et placement du Québec, and Bouwinvest, the Dutch pension investor, this year. The first, which closed in April, was a $800 million partnership between the two investors and the Australian developer Logos Group to develop logistics assets in China.

The French capital region is home to 18 universities, nearly 60 business schools and roughly 635,000 students, which translates to 5 percent of the area’s total population, according to a report from JLL. Approximately 100,000 of those students are from other countries, a figure that is growing by about 5 percent annually, said Karim Habra, head of Europe and Asia-Pacific for Ivanhoé Cambridge.

Overall, France has the second-highest number of university students in Europe at more than 2.5 million, according to a 2017 report from Savills, trailing only Germany, which boasts more than 2.75 million.

However, this large population has not been catered to on an institutional level, with just 1.5 percent of Paris students living in purpose-built student housing. France saw just $1 billion of investment in the sector between 2016 and 2018, whereas the US and the UK attracted more than $27 billion and $13 billion, respectively, according to a report from Knight Frank. Of the record-setting $16.3 billion invested globally in student housing in 2018, just 2 percent was in France.

“There is very little quality stock out there, and it is not appropriate for students who are looking at being in the right accommodations,” Habra told PERE. “We need to meet the needs of this population and be there to create the right product for them, the students looking for quality, for services, for a full-package type of product, especially for international students coming into Paris.”

The joint venture will target development sites where it can build at least 500 apartments that are high quality but still affordable for college students and recent graduates. The group will also focus on properties within 45 minutes of the Paris city center by mass transit. Hideki Kurata, Greystar’s managing director of France, said the venture would capitalize on new infrastructure derived from French government’s Grand Paris initiative, which, among other things, aims to add 68 stations and 200 kilometer (124 miles) of high-speed rail to the city’s metro system.

Greystar opened an office in Paris in September 2018 and has largely pursued a build-to-core strategy in the country similar to that of its new JV with Ivanhoé Cambridge and Bouwinvest. The manager, which has $35 billion of assets under management, acquired Acteva, a French student housing operator with 3,900 beds, last April.

Robert Koot, director of European investments for Bouwinvest, said the joint venture fits the firm’s broader commitment to affordable housing. Multifamily – including niches such as student and senior accommodation – accounts for half of the investment firm’s €13 billion of real estate assets, Koot told PERE, adding the sector is even more attractive given the pandemic-driven disruption in other sectors, such as retail and office. “The sector is well positioned in general,” he said. “Before covid, this was already the case and I think post-covid it has become relatively more attractive. The sector has very strong fundamentals in Paris and many markets globally.”