How Expats and International Students Created a Mega Real-Estate Crisis in Europe

  • Post category:Articles
  • Post last modified:June 1, 2022

The internationalization of cities has caused a number of problems that have worsened social-economic inequalities.

As a direct actor (international student, then expat) in this problem, I wish to shine a new light on this phenomenon — especially since no one is speaking about this.

To fully understand the problem and how it unfolded, we need to go back to the beginning.


Erasmus

In the mid-80s, the European Commission established an exchange program for students.

They called it the Erasmus program. The program really took off in the 2000s.

It became so popular that movies were made about this (see the movie The Spanish Apartment).

By 2006, 1% of students in the entire EU student population were enrolled in Erasmus.

The program was dubbed one of the most successful initiatives of the EU ever when former EU Commission President Jean-Claude Juncker said that it had likely enabled the birth of “one million Erasmus babies.”

All was going well. Too well.


2010s

By the 2010s, the Erasmus program was immensely famous and everyone wanted to be a part of it.

The new generation began to speak English early in Europe due to the availability of US TV shows on pirate websites (remember Megaupload?) and the rise of the habit to watch them in their original language (I learned English with How I Met Your Mother.)

While students used to learn a foreign language while on Erasmus, now they spoke it even before they began their studies.

This created a generation (my generation) of people that were no longer restrained to study in their home country due to the language barrier.

Now, they could go study abroad full time.

Many universities understood this.

As the world became smaller and smaller, university rankings became more and more important.

One of the criteria by which universities were judged was their capacity to attract international students.

To do so, they created programs (first masters, then bachelors) in English language to welcome as many students from as many countries as possible.

Then they advertised the program with catchy sentences such as “study with other students coming from more than 50 different countries” and participated to student fairs in faraway countries (I wrote about this here).

Pioneers of such programs were the Netherlands, quickly followed by Scandinavian and Eastern European countries (big countries like France, Spain, Germany, and Italy, too attached to their language, followed much later).

It worked beautifully: universities were offering the right product at the right time to the right audience.

The success was overwhelming.


Too Many People

Obsessed with the idea to escape competition, I have always gone to places (Perth in 2013, Palma in 2014, Rotterdam in 2015, Brussels in 2018) one or two years before it became mainstream — hence invaded by hordes of people coming to do the exactly like me: escaping the crowd.

When I arrived in Rotterdam (Netherlands) in July 2015 to study, I entertained 6 different offers for a student room and ended up renting a big 20-meter square room in a 120-meter square apartment, for roughly 320 euros a month all-in.

While I was moderately happy, I would consider this a dream today.

As I organized my life in Rotterdam, I quickly understood that what I was enjoying was too good to last.

Such a nice place would not remain secret very long.

I told my mum to invest and buy an apartment when I understood the upcoming invasion of international students was near (she didn’t, too bad).

By 2017, two years after I arrived, there were no more rooms in Rotterdam under 550 euros.

In 2018, a girl was renting out her small room for (wait for it) 660 euros! Shared kitchen, small living room, two other roommates (the landlord was netting 1800 euros a month, net!)

The entire country was besieged by international students and expats from everywhere.

In Groningen, a city in the north of the country, students slept in tents installed on a football field.

There simply weren’t enough rooms in the city.

Let’s not even speak of Amsterdam.

Faced with a real estate crisis I didn’t want to battle, I left the city and moved to Brussels for my masters.


How It Happened

The problem with students is that they are poor. They can’t afford to rent out entire apartments for themselves.

So, they rent a big apartment with several bedrooms, get roommates, and divide the rent per person.

Back to when international students were Erasmus only, owners didn’t want to rent out their place for only four months.

Smart owners figured it this out very quickly and started charging a higher price for Erasmus, who gladly paid it.

When international, full-time students arrived en masse to study, landlords made a rapid calculation.

While they used to rent out their place with two bedrooms for 500 euros/month to a family, they quickly figured out that by splinting the apartment into rooms, they could ask for a higher price.

Doing so, landlords doubled, sometimes tripled the rent.

The rent of my first apartment in Rotterdam was 890 euros for three bedrooms. By the time I was gone, they rented the apartment for 500 euros per room — a 68% increase!

This practice is now ubiquitous in every major European city.

Because of this, local people can no longer afford to rent an apartment. They have to move away from the center, or buy.

My friend, a physician native from Rotterdam, bought a place in 2019 because he could not find one to rent.

image 22
We can deduce from this image that Italians and Spanish are the main ones to blame for this crisis. Source: Statista
image 23
With its high number of unicorns, Estonia has become a hub for EU startups. Source: Statista

Where We Are Today

Despite what the mainstream media will tell you, the clash between the right and the left does not exist anymore.

It has been replaced by the clash between people like me, which Marc Andreessen calls “the laptop class”— those that speak several languages, don’t have kids, work on a laptop, can move easily — and “the local people” — those that work in factories, drive their kids to the football game, and organize neighborhood barbecues (it’s cliche, but you get my point).

I made the observation a few years ago that people in London, Paris, Warsaw, Amsterdam, New York, and Barcelona had more in common with each other than they had with their fellow citizens from the “the countryside”.

When former British Prime Minister Theresa May said “if you believe you are a citizen of the world, you are a citizen of nowhere”, she was effectively telling the laptop class that it was time to go home — or to choose one.


About Expats

From an economic perspective, expats make countries richer. They produce economic outputs and spend their salaries on site, adding to the economy’s dynamism.

But they also widely contribute to social-economic inequalities.

In most countries, expats earn more and benefit from tax cuts. This enables them to rent nice apartments which drives the price of the entire real estate market up.

Local people must subsequently move away and lose access to their own cities.

The best example is Brussels, a city where local people are in minority. In London, it’s a bit more than 30%.

Why am I speaking about this?

Because I have been on both sides of the story.

In Poland, I was an expat living in a studio in the center of Warsaw, in one of the nicest neighborhoods, earning much more than the average Polish.

In Brussels, I could neither find a job nor a house because Belgian people are required to speak three languages (English, Dutch, French) while expats are only required to speak English; expats don’t pay taxes for two years; and expats lock up rooms by only allowing people from their own country to rent them out.

While Brussels is one of the most dangerous and poorest cities in Europe, 70% of people that work there weren’t born in the country.

Let that sink in.


Conclusion

This article is weird since it’s the equivalent of waging a war against none other than myself.

I am currently living in Estonia where I am directly contributing to the real estate crisis in Tallinn, which obviously, is an ethical dilemma.

On the bright side, these experiences taught me a lot.

Living in eight countries in seven years as both an expat and international student, I have seen the damage that an entitled (mostly Western) elite has unleashed onto the honest, hardworking local people.

Hopping from one place to another, the laptop class seeks to enjoy the fruits of a great country or city built by the sweat of others while their respective countries sink into the decadence of debt, corruption, mismanagement, and violence.

We’re in an age where no one is cooperating any longer. Everyone seeks to save themselves from a world collapsing, which only fastens the process.

This disturbing mentality explains the ceaseless flow of employees from one company to another (a phenomenon called The Great Resignation) or from one digital nomad country to another, as they all look for the one country/company that will offer the best benefits.

As a recap, countries that welcome expats:

  • Benefit overall from an economic point of view
  • Have their social economics inequalities exacerbated
  • Will go through a real estate crisis

Countries that lose their “laptop class” citizens:

  • Lose economic and intellectual capital

The rich countries and their rich citizens become richer, while the poor citizens from the rich country and the poor citizens and poor countries become poorer.

Gaps widen. And history teaches us that when gaps widen, people become unhappy.

If we want to avoid other crises, it’s about time we rethink the whole system.

Its collapse won’t advantage anyone. Far from it.

For more articles, head to auresnotes.com.

Photo by Dim Hou on Unsplash

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