The 2015/2016 Spotlight World Student Housing report from Savills has christened the student housing market as a mainstream real estate asset.
Once considered an alternative asset, student property has emerged as a popular choice for investors all over the world.
Here are some points from the report to highlight why the asset class has been classified as a mainstream asset:
- United Kingdom
After a rise in tuition fees and a change to immigration laws, it’s safe to say that the UK has a resilient student market.Speaking about the UK’s market, Paul Tostevin, Savills World Research commented: “Top-tier university cities in the UK with low supply have the greatest potential.”With around 388,000 foreign students, the UK has the second biggest destination for international students.A high number of award-winning higher education establishments makes the UK an ideal location for investment. In the first 9 months of 2015 $6.5 billion was invested in the student property sector.
- United States of America
The USA has seen a drop in the amount of investment in the student property sector since its $4 billion peak 2012. In 2015, investment volumes have decreased by 30%.
Despite a reduction in investment, the US remains the number one choice for international students. The country is home to 886,000 students (a quarter are from China).With 56% of The Times top 50 universities and 36% of the QS Top 50 universities situated in the USA, the country is an attractive option for students.
- FranceQS has ranked Paris as the number one student city in the world. France is home to 7% of foreign students.Relatively low tuition fees coupled with world-renowned higher education establishments make it a top choice for property investment.International students currently account for 12% of the market. This number is expected to rise to 30% by 2020. Domestic student numbers have also been on the increase.
The report states that Germany has experienced a sharp growth in student numbers. Numbers have increased by 36% over the last 10 years. 11% of all enrolments are now by international students.Universities in Germany are far more spread out than those in the rest of Europe. Apart from Berlin and Munich, university towns and cities have a small student population of between 10,000 to 50,000 students.In terms of bed numbers, private accommodation makes up 16% of the market however, new investment will bring this figure up to 22%.
Ranked as the 5th most desirable location for international students, Australia is favoured by students from Asian markets.International students account for 16.5% of Australia’s total student population. 40% of purpose-built student rooms are occupied by international students.
What does the future hold for student property?
Increasing world mobility makes the student property market one which will have plenty of tenants for years to come.
Globally, rising student numbers will mean an increasing demand for student property. After all, living away from home is an integral part of the university experience.
Rising tuition fees, changes to immigration laws and the performance of individual higher education establishments will no doubt have an effect of the student property market however, it is yet to be seen how this will play out.
The Savills report concludes: “New stock developed now will pave the way for institutional investment in the future. We expect that the right income-producing stock in the right markets will find global investors and see yield compression in the medium term.”
Want more? Click here to check out this UK Student Accommodation Guide.