Business Forum • 11 October, 2024 at 12:45 PM
Student housing in Central-Eastern Europe is set to expand following a €50 million commitment by the European Investment Fund (EIF) to an initiative run by Lithuanian investment company 1 Asset Management. The EIF contribution, backed by the InvestEU programme, supports the Central and Eastern Europe Student Housing Fund and brings total pledges for it to €112 million. It makes the CEE Student Housing Fund the first in the EIF portfolio that is focused exclusively on social infrastructure in Central-Eastern Europe.
CEE Student Housing Fund will have the capacity to finance the construction of new housing for up to 3,500 students in Poland, the Czech Republic, Slovakia, Lithuania, Latvia and Estonia. The project scope includes the construction of seven or eight buildings in major academic cities over the next five years.
The investments will start immediately as CEE Student Housing Fund has already secured the pipeline, begun financing and the construction of student housing projects to accommodate 1,800 students in the Polish cities of Warsaw, Wrocław and Gdańsk. Four buildings – two in Warsaw, one in Wrocław and one in Gdańsk – are due to be constructed in 2025-2027.
“We are excited to partner with 1 Asset Management to support the development of modern student housing across Central-Eastern Europe,” EIF Chief Executive Marjut Falkstedt told a signature event in Vilnius. ”This is the EIF's first investment in a social infrastructure fund, and we are glad to be making our contribution in support of European students so that they are better-placed to pursue a brighter future.”
1 Asset Management hailed the EIF's pledge as sign of confidence in the company.
“Having an institutional investor like the EIF adds credibility to our investment strategy for student housing projects,” said Chief Executive Officer Alius Jakubėlis at 1 Asset Management. “This is a confident step forward. With growing demand, strong occupancy rates and increasing rent levels, the student-housing sector serves as a potential hedge for investors during the current economic situation.”
The CEE Student Housing Fund already financed student housing projects for a total of more than 1,500 students in the Lithuanian cities of Vilnius and Kaunas, Latvia's capital Riga and the Polish city Kraków.
Fund Partner Matas Mockeliūnas said the current priority is to expand such projects in Poland, where the student population totals 1.2 million and needs are the greatest.
“Our focus remains in Poland while central and eastern Europe in general is on our radar,” said Mockeliūnas. “I am excited about the EIF joining this venture and looking forward to transforming the regional student housing infrastructure and addressing the pressing need for modern living spaces for students as well as young professionals. Most public dormitories are outdated and fall short of required living standards, the demand in the region is high and supply is still low.”
Lithuania's real estate development company Hanner, a strategic investor in the CEE Student Housing Fund, earlier this year announced an investment of €25 million into a student housing project in Wrocław. Hanner plans to invest €50 million in residential projects in Poland between 2024 and 2028.
Arvydas Avulis, Chairman of the Board of Hanner, said he was very pleased with the success of the projects already developed in Poland.
„The success aligns with our strategic development goals and encourages us to invest more in real estate projects in central, as well as southern Europe. We predict that demand for student housing will only increase in the future as the number of young people in cities grows," Avulis said.
The European Investment Fund (EIF) is part of the European Investment Bank Group. Its central mission is to support Europe's small and medium-sized enterprises (SMEs) by helping them access finance. The EIF designs and develops venture and growth capital, guarantees and microfinance instruments that target this market segment. In this role, the EIF advances key EU policy objectives including competitiveness, growth, human capital and climate action.