The intention of the authors of the bill amending the Acton Social Forms of Housing Development and Certain Other Acts is that the amendment concerning non-refundable financial support for the creation or modernisation of premises serving the housing needs of students and doctoral students will increase the supply of places in student residences, which is highly inadequate. “Contrary to many market concerns, however, these changes should not adversely affect the private student residence market, which is currently growing rapidly,” comment Jan Pruski and Bartłomiej Zatoński, lawyers from the Real Estate Law team at Wolf Theiss.
The draft law amending the Act on social forms of housing development and certain other acts, prepared by the Ministry of Development and Technology, was submitted to the Law Commission of the Government Legislation Centre on 12 August this year. One of its objectives is to extend the possibility of providing non-refundable financial support for the creation or modernisation of premises to meet the housing needs of students and doctoral students. Currently, the social and municipal housing programme provides for the granting of such funding for the purpose of increasing the municipal housing stock to meet the needs of low-income people, including those at risk of social exclusion. In the intention of the authors of the bill, the postulated change is to increase the supply of places in student residences, which is highly insufficient. Suffice it to say that in the academic year 2022/23, the number of students was 1.22 million and public dormitories offer only 115.3 thousand places.
Development of the private dormitory market in Poland
The existing shortage of places in university dormitories, combined with rising rents for self-contained flats in the largest academic centres, is creating space in the market for investment in private dormitories. An increasing number of players are choosing to capitalise on the existing demand and invest their funds in private student residences. Recent weeks have seen the announcement by a joint venture of Signal Capital Partners, Griffin Capital Partners and Echo Investments of the StudentSpace project – a complex of modern dormitories, the first of which is to be built in Kraków. In the following year, StudentSpace is also to appear in the capital. In the coming years, nearly 5 000 places for students are to be created as part of this project.
Private student residences – a remedy for the lack of places for students?
Overall, private student halls of residence are estimated to be worth €11.5 million in 2022, 50% more than the year before. Still, the number of places in private buildings of this type – around 14,000 beds – is a drop in the ocean of need. The greatest availability of places in private student residences can be counted on in Kraków, Wrocław and Łódź. Warsaw, despite being the largest academic centre in Poland (over 20% of the total student population), is outside the podium.
“A number of factors support the prediction of further growth in investment in private student residences in Poland. First and foremost is the gap between demand and supply, rising rents in student cities, and the good financial results of private dormitory operators boasting almost full occupancy for the 2024/25 academic year. Non-economic aspects also play a role – public dormitories are often past their prime, in need of renovation and modernisation. Private student halls of residence are attractive – modern, well-thought-out, combining opportunities for integration between students and living comfort. What’s more, there is a growing number of foreign students in Poland, which is a target group for the private student accommodation market. However, there are some concerns as to whether the proposed amendment will reverse the positive trend for operators of private student dormitories”, comments Bartłomiej Zatoński, Associate in the Real Estate Law team at Wolf Theiss law firm.
Will the enactment of the law and the increase in public dormitory places affect the demand for private dormitories?
Data presented in a report presenting the results of a study on the housing situation of students in Poland in 2023, compiled by the Amron Centre, shows that around 48% of all students live in a rented property or a public university dormitory. The remainder live with family or friends or have their own property. Assuming that almost half of all students – around 600,000 – are interested in a place in a halls of residence or accommodation from the private market, it would undoubtedly be a years-long process for universities to provide so many places in public student halls of residence, requiring huge amounts of money and certainly difficult, if not impossible, to achieve. Nevertheless, the government has repeatedly declared its intentions to increase the number of places in student halls of residence, and this is reflected in the bill. Whether publicly subsidising the development of student halls of residence will dramatically increase their standard is a separate question. It seems that the solution to the shortage of places in public dormitories will rather be to modernise those already in need of major refurbishment and to build new ones of a much lower standard than that offered in private dormitories. This will make it possible to provide as many places as possible for students with lower budgets, while at the same time allowing private and public student halls of residence to coexist, and will not directly hit investors putting their money into private student halls of residence. Their offer will primarily be aimed at students expecting a higher standard, additional facilities and with a larger budget, who would not be interested in a place in a public dormitory anyway.
“Public student halls of residence should not compete with private student halls of residence because of their different nature. On the one hand, public dormitories are supposed to provide as many places as possible in an acceptable yet quite minimalist standard. On the other hand, private dormitories provide a much higher standard, often offer additional amenities for their occupants and, above all, their rent is several times more expensive. The price gap between public and private student halls of residence is usually filled by flats rented from private individuals, which are often of a lower standard and price than private student halls of residence. It is the owners of such flats who are realistically exposed to a possible shortage of tenants if the proposed law is passed. Therefore, it seems that investors interested in building new private dormitories, of which there are still few in Poland, will still have the opportunity to profitably invest in this real estate sector,” concludes Jan Pruski, Associate from the Real Estate Law team at Wolf Theiss law firm.
Authors: Jan Pruski and Bartłomiej Zatoński, lawyers from the Real Estate Law team at Wolf Theiss.
