Tucked away in the grounds of a former US military hospital, on the outskirts of the German city of Heidelberg, stands a huge wooden box. Complete with windows and furniture, this 14 sq m structure looks, at first glance, more garden shed than home.

But this is the prototype for a four-storey student dormitory – an attempt to provide relief for young people caught up in Germany’s housing shortage.

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Like many cities around the world, Heidelberg is struggling to house a rapid influx of young professionals and students. This has created a lucrative rental market and driven a housing shortage. Since 2010, rents in the university town have increased by almost a quarter. For students, who often live in shared apartments, prices average at around 437 euros ($492) per month. 

Since 2010, rents in the university town have increased by almost a quarter

In a bid to boost supply to ease the national housing crisis, German Chancellor Angela Merkel’s government has pledged to build 1.5 million new flats nationwide before the end of her fourth term in office in 2021.

Faced with sky-rocketing rents in the southwestern city, one group of 25 university students has taken matters into their own hands and decided to build their own student dorms: Collegium Academicum.

"We want to create affordable living space, where students can live together and learn together," 22-year-old psychology student and member of the dormitory project Ina Kuhn told BBC Capital.

Rents at Collegium Academicum will average at 300 euros ($338) per month, with the hope of dropping even lower in the future, once the bank loan has been paid off.

A draw for international students

Founded in 1386, Heidelberg University is Germany's most ancient university and ranked among the top three in the country and 47th in the world – attracting increasing numbers every year. Currently, some 39,000 of the city’s 160,000 citizens are students.

Its picturesque, toy-town landscape is also proving a lure for foreigners. According to the city’s administration, most of Heidelberg’s newest arrivals in recent years came from China, Italy, Romania, India and Poland – often aged between 18 and 30.

Compared to university students in the US and the UK, however, German students have a significant financial advantage. In 2014, all 16 German states abolished university tuition fees for undergraduate students, meaning both domestic and international undergraduates at public universities in Germany can study for free. Most students pay a small fee per semester to cover their administration costs.

More demand than supply

The winter semester is particularly difficult for students searching for housing though, says Studierendenwerk, Heidelberg’s university student services, which provides advice and limited accommodation in purpose-built dormitories.

“At that time, there are often more students trying to find a place to live than there is accommodation – especially affordable accommodation,” says Tanja Modrow, head of Studierendenwerk Heidelberg.

Therefore, many students either have to live farther out of town, or deal with the higher living costs. Heidelberg’s “green” appeal has also seen more graduates staying in the university town to start their careers and families, putting further strain on housing supply. In the state of Baden-Württemberg, where Heidelberg lies, Germany’s environmentalist Green Party is currently topping opinion polls with 32%.

Sustainable housing

On the land of the former US military hospital, purchased from the city, the 25 students behind Collegium Academicum hope to ease the demand for Heidelberg by providing space for 226 dorms in 46 shared apartments.

Sustainability is also a key goal of the project. The land itself was purchased from the city. Fitted with triple-glazed windows and built entirely out of wood, Collegium Academicum will be the biggest building in Germany without metal supports. An onsite workshop will also allow tenants to carry out small repairs. But with a hefty price tag of 16 million euros ($18 million), the sustainable project doesn’t come cheap.

Most of the money has been provided by means of a bank loan, grants from the state and Germany’s credit institute for redevelopment. But 2 million euros of the total cost was needed in equity capital to get the project off the ground.

"This was the building block of the project," says Kuhn adding that six years of seeking out donations and support was no easy feat. Much of the financial support came from local individuals.

"We were also often at the weekly market in Heidelberg with our information stand, to seek out support from people who are interested in sustainable projects,” she says.

The rising tide of ‘Wohnungsnot’

Heidelberg students aren't alone in their struggle to find affordable housing in Germany. The German Economic Institute's latest price index shows that rent prices for students in German university towns have risen from between 9.9% and 67.3% since 2010. In April, thousands of people took to the streets of Berlin to demand more action from the government. The German capital of Berlin, which has become one of the world’s fastest-growing real estate markets, will soon hold a referendum on mass expropriation of property by the city.

Students under pressure worldwide

Housing shortages and unaffordable rents are an all-too-familiar problem for students in other university towns.

In Hobart on the island state of Tasmania in Australia, the University of Tasmania recently purchased a three-star hotel in a bid to help students who have found themselves struggling to find affordable living space. A growing number of tourists and the expansion of Airbnb have reportedly played a significant role in the city's housing shortage.

Meanwhile, on the US West Coast, at the University of California, Berkeley, a new programme is pairing graduate students with retirees who have an extra room. In return for place to call home, students provide pensioners with social interaction, help around the house, as well as a monthly rent of less than $1,000 – less than a third of the average prices for apartments around Berkeley.

Back in Heidelberg, construction is due to begin within the coming weeks, with the first tenants hoping to move in by the beginning of 2021.

Applicants to the dormitories will go through a so-called casting process, as is the norm across most student house shares in Germany, known colloquially as “WGs”.

"We want a mix of ideas and backgrounds,” says Kuhn. “We want people from different fields of study and different political ideas.”

By the time the building and the renovations are finished, many of the founders of Collegium Academicum will have graduated.

"This is a project made to last," Kuhn adds. "This is about building for the future and making sure that other students have affordable housing too."

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