Campus Apartments and Dorms: Hotter than the Hotpots They House

The European residential market lately has looked a little like the U.S. market. Housing prices have stumbled in the U.K.; concern has risen about the Spanish residential market.

However, there’s one housing type in Europe that’s flourishing instead of fading: Student housing.

A recent Wall Street Journal article noted that investors are favoring student housing over office space and other property sectors that haven’t been performing at high levels.

Student housing can provide annual returns of between 10 and 15 percent, according to Ralph Winter, chairman of Zurich-based property group Corestate AG–solid numbers in the recently rocky real estate market.

Student housing is doing well in part because education is, too–the number of students in the European Union’s 27 member nations rose from 15.9 million in 2000 to 18.5 million in 2005, statistics company Eurostat said. Some countries, like the U.K., have been aggressively pushing higher ed.

All those students need a place to live. And for schools that don’t have any large resources to develop living quarters, adding housing can mean private investment partnerships.

Take, for example, Arizona State. Arizona State University President Michael Crow has said he wants every freshman to live in a campus dorm to better experience life–someday he hopes to make it a requirement.

But housing is expensive. So, because the college couldn’t pay for all of the new dorm itself, ASU struck a private partnership to construct a $100 million, privately built and operated student living complex, according to the East Valley Tribune.

The privately owned apartments are more pricey than standard dorms; they’re nicer, too. Which is raising some questions at ASU: What do you do when you need to enlist developers to help fund new student housing, and those developers need to make a profit?

It makes sense for developers to work with universities to create student housing; land near universities is often hard to come by and pre-existing buildings rarely come on the market, according to the Journal.

But how should that partnership work? Should students be allowed to earmark scholarship or grant dollars toward housing that’s more deluxe–and more expensive–than the standard dorms?

Should privately owned buildings offer discounts to students who prove financial need?

Or should schools lease or sell their residential land and completely exit the construction and renting situation? What do you think?