Finland is facing record-breaking levels of demand for student housing as the new academic year approaches. According to the Finnish Associations of Student Housing Organisations (SOA), some cities are already struggling to meet higher-than-usual demand driven by cost-of-living increases, and growing numbers of international students choosing to study in Finland.

More than 61,000 applications were received in Finland’s 2023 higher education application round, with 53,000 of these from international students. The total number of applications in 2023 was almost double that of 2022, when 32,000 applications were received. These figures do not include applications made outside the primary joint application process allowing students to apply to multiple universities via one application.

SOA Executive Director Lauri Lehtoruusu told news agency STT “During the Covid pandemic and a couple of years before, in many places, it was possible to offer housing to pretty much every applicant, even if was not necessarily their first choice. Since last year, the situation is becoming increasingly tighter.” In Helsinki, around 8,000 students have applied for student accommodation; however, Helsinki’s student housing association, The Foundation for Student Housing in the Helsinki Region can currently only accommodate around one in four student applicants in the metropolitan area.

Finland’s new government’s planned benefit cuts are expected to further increase demand for student housing association-provided housing, which offers accommodation at much lower prices than the private market. According to a report by Finnish media outlet Yle, students living in Helsinki could face an increase in living costs of around 75 euros a month because of the planned benefit cuts.

Growing number of international students

Despite implementing tuition fees for international students in 2017, Finland has observed a rise in the number of international students in recent years.

In 2022, Finland received a record-breaking 8,336 applications for first-time residence permits, an increase of 62% from 2021 when 5,149 first-time applications were received. As of October 2022, over 7,000 applicants from outside the EU had been granted first-time residence permits, an increase of around 54% from 2021 when 4,595 residence permits were granted to students. The 2022 figures surpass the record-breaking year of 2016 when 6,348 first-time residence permits were granted to students, according to a report in the Helsinki Times.

The Finnish Immigration Service predicts that there will be approximately 8,500 resident permit applications from students in 2023 and 9,000 in 2024.

New legislation has positively impacted international student numbers

The sudden increase in international student numbers is likely to result from new government legislation introduced in April 2022, which introduced a range of measures designed to increase the attractiveness of Finland as a study-abroad destination. Under the new legislation, international students can now be granted a residence permit that covers the entire duration of their studies, whereas previously permits were only granted for two years at a time. The new legislation also makes it easier for international students to work in Finland post-graduation and for dependents of students to be granted visas.  

However, some stakeholders in the higher education sector are concerned that international student recruitment may slow significantly following an announcement by the Finnish government in June this year that it will move towards full coverage of tuition fees for non-EU students. This means that international student tuition costs will no longer be offset by government funding.

Currently, international fees start from €4,000 but non-EU students may soon have to pay more to cover the full costs of tuition under the new measures. A date for the changes to come into effect has not yet been announced. Finland’s Ministry of Education predicts that the move could result in a 43% drop in non-EU students, however, Helsinki-based universities have said that they do not anticipate a significant impact on international recruitment.

Leading global investment firm KKR enters the Finnish residential real estate market

A recent Savills report highlights that investment in the residential real estate market in the Nordic region is growing and there is a strong case for investment in purpose-built student accommodation. The Savills report notes that the strength of investor interest in the region is evident by “many of the largest PBSA transactions in Europe taking place in the Nordics over the last 24 months.”

While Finland has a lower baseline student population than its neighbours, it is attracting the attention of residential real estate investors.  Of note is the recent announcement by KKR’s European real estate platform that it will be acquiring a portfolio of thirty high-quality residential properties in Finland from Kruunuasunnot. The portfolio includes over 1,200 residential units, with two-thirds of the properties situated in the three major cities of Helsinki, Turku, and Tampere. The transaction is the largest real estate deal to take place in Finland this year and marks KKR’s first investment in Finnish property. The acquisition is expected to be finalized by summer.

Commenting on the acquisition, Ian Williamson, Managing Director and Head of Core Plus Real Estate in Europe at KKR said that “We’re delighted to enter the Finnish residential real estate market with this acquisition. This is our first residential investment in our recently launched European Core Plus strategy and builds on our broader European track record in the residential market. We believe the Finnish residential market has compelling fundamentals, underpinned by a stable economy and strong demand for urban rental housing. The entry basis and business plan align well with our strategy.”