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Rents for student housing in the Netherlands continue to show growth and the upward trend is set to continue into 2013, according to research from UK-based adviser Savills. The key driver is a growing supply/demand imbalance in the market, the adviser added.

Although market evidence is still sporadic, Savills expects gross yields for prime student residences to continue to range between 5.5% and 6.5%, depending on location, asset quality and rental contract. This is lower than current achievable yields for prime offices (at 6.4%) and shopping centres (at 6.5%) in the Netherlands showing the potential strength of this asset class. For secondary student residences gross yields can reach 7.5%.

The supply/demand imbalance points to an interesting niche investment, noted Marcus Roberts, head of student investment at Savills. 'In keeping with past economic downturns, student numbers in the Netherlands have grown in the weakened labour market. This has created a window of opportunity for investors to address the imbalance of student housing supply and increasing demand.'

Savills expects a further 80,000 new student housing units will be required by 2020 to meet rising demand, as an additional 150,000 student registrations are expected over the next seven years. As well as a growing number of local registrations, levels of international students are also rising largely due to low tuition fees and the introduction of more English-language courses.

In the private rental market students pay on average between EUR 310 per month for private student halls and EUR 360 per month for solitary rooms and flat shares, while on the social housing market levels are lower due to strict regulations, averaging at just over EUR 200 per month. In Amsterdam monthly rents in the private market exceed EUR 450.

As the capital city, Amsterdam has the highest number of students and universities in the Netherlands, accounting for 23% of the country’s student population, followed by Utrecht (13%) and Groningen (11%), according to Savills.