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Global investment in student housing reaches new heights


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08 November 2017

News - 8th November 2017 - (ICEF Monitor)

Short on time? Here are the highlights:

  • The availability of suitable student housing looms large for many study destinations
  • The sector is now drawing significant private sector investment
  • Large investors and/or multinational housing providers are moving quickly to address the opportunity of the undersupply in student housing

Most study destinations don’t have enough purpose-built student housing (PBSH) to go around, or at least not sufficient beds to keep pace with growing enrolments. Earlier this year, the Irish government announced a National Student Accommodation Strategy in a bid to create tens of thousands of new beds through 2024, and to address a long-standing shortage of student housing in the country in the process. PBSH beds have also historically been in short supply in Australia, a challenge that has helped push up housing costs in that leading destination. Within the past year, however, private providers have increased the stock of PSBH beds they offer by more than 50%. And in the US, new providers are introducing premium PBSH housing properties to a market that has traditionally relied on shared dormitory rooms.

This persistent supply-demand gap in purpose-built student housing is increasingly attracting large private investors that see an opportunity for above-market returns. And as we first observed a couple of years ago, it has also given rise to a growing field of multinational housing providers that are further helping to spur private investment in student housing on-campus and off, and both independently and in partnership with institutions.

A new report from global real estate services firm Savills highlights that global investment in student housing reached a record-high US$16 billion in 2016, up from less than US$8 billion only two years before. “Institutional investors, sovereign wealth and pension funds snapped up portfolios in a global search for scale and income producing investments,” says the report. “Activity was focused on the US and UK; the most mature global markets where the majority of investable stock is found. Viewed by investors as a residential asset, the sector is maturing fast in mainland Europe.”

Even so, and as the following chart reflects, student housing stock is limited in many study destinations, particularly in relation to total tertiary enrolment.

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