2021-11-25-莱坊-Higher_Education_Property_Sector_December_2021_31页_4mb

Summary of the Higher Education Property Sector

Core Content

The higher education property sector in France is experiencing rapid growth, driven by the expansion of both public and private educational institutions. The rise in student enrollment, especially in private education, has created a significant demand for new and improved campus spaces. This growth is further fueled by the digital revolution, which has led to the adoption of hybrid and interactive teaching methods, necessitating modern and flexible property developments.

Main Points

• Enrollment Growth: Since the early 2000s, higher education enrollment in France has sharply increased, with the private sector seeing the highest growth. In 2019, there were 2.73 million students in total, with 21% in the private sector and 26% in the Greater Paris region.

• International Appeal: France holds a strong position in international higher education, with 30 universities in the 2021 Shanghai rankings. Institutions like the University of Chicago and Holberton School have chosen to expand in Paris, contributing to the city's status as a global education hub.

• Digital Revolution Impact: The shift to digital learning has prompted schools to rethink their physical spaces. Hybrid teaching methods are now common, and there is a growing emphasis on versatile, interactive learning environments. While full online learning is not the future, the integration of digital tools is reshaping the use of educational spaces.

• EdTech Growth: The EdTech sector is booming, with over 350 companies in France, most concentrated in the Greater Paris region. Although EdTech leases are currently limited, the sector's growth is expected to increase the demand for office space.

Key Figures and Players

• Major Institutions:

  • HEC Paris, INSEAD, ESSEC Business School, and ESCP Europe are among the top European business schools.
  • NEOMA, SKEMA, and EM Normandie are notable examples of large private institutions expanding their campuses.

• Private Education Groups:

  • Galileo Global Education, Ionis Group, AD Education, and OMNES Education are leading private education groups.
  • These groups are investing in new campus projects and digital training options to enhance their brand and meet growing student needs.

• Smaller and Independent Schools:

  • Many smaller institutions are joining forces with larger groups or developing digital learning options to reduce costs and expand their reach.

Lettings Market Trends

• Transaction Growth: The number of lettings transactions in the Greater Paris region has increased significantly. Between 2016 and 2021, 73 transactions of more than 1,000 m² were recorded, totaling 234,740 m².

• Large Transactions: Over the past five years, more than ten transactions of over 5,000 m² have been recorded, marking a shift towards larger campus developments. Examples include NEOMA's 6,500 m² lease in the 13th arrondissement and SKEMA's 13,200 m² campus in Suresnes.

• Location Trends: Paris remains the focal point of the higher education property market, accounting for 58% of total lettings transactions over 1,000 m² and 53% of the total volume. The Left Bank is the traditional location for educational institutions, with South Paris being the most active area.

• Rental Rates: The average rent in the Greater Paris region reached 378 €/m²/year between 2016 and 2021, slightly lower than the 431 €/m²/year in Paris itself.

Outlook

• Investor Interest: The higher education property sector is becoming increasingly attractive to investors due to its stability, long-term leases, and strong tenant base.

• Future Prospects: With the return of international student mobility and continued investment in digital and hybrid learning, the sector is expected to grow further. This presents opportunities for both domestic and foreign institutions to expand their physical presence and enhance their educational offerings.

Conclusion

The higher education property sector in France is a fast-growing and increasingly important part of the real estate market. It is driven by the need for modern, flexible spaces that support hybrid learning and social interaction, as well as the strong international reputation of French educational institutions. The continued expansion of private education and the rise of EdTech are key factors in this growth, making the sector an attractive investment opportunity.