Student accommodation has become a lucrative investment asset, but in which countries?
We have already looked at the reasons why investing in student accommodation has been thrust into the limelight once again. This week we shall look at the different markets that are performing well. Why? Well, despite it being institutional investors and pensions funds making the big scale investments, there is an opportunity on a grass roots level too. Private investors can buy just a single unit within student accommodation and enjoy the benefits it brings.
Many countries are seeing a rise in purpose built student accommodation. Built to heighten student experience and to meet demand. Attracting international students is vital for many countries providing a good source of income. Consequently, more attention has been focused on how to increase student numbers and accommodation is one of these key variables.
Great Britain’s high level of education is known worldwide. Drawing in many international students who more recently are enjoying a discount thanks to the weakening pound of the back off Brexit. Over the last 10 years the international student population has grown up five percent. Currently there are 37,200 units in the pipeline with just shy of another 100,000 expected in the next five years. Investment from Singapore topped the charts at GBP 1.2 billion in 2016 followed by the US. Whilst the majority of students live in the private rented sector many international students prefer the modern aspects of purpose built student accommodation and this is one area that investors can exploit.
After China and India, America has the third largest student population. Attracting over 20 million students to three of the world’s top three universities: Massachusetts Institute of Technology (MIT), Stanford University, Harvard University. The US is also the number one destination for international students. A cluster who typically want the ease and convenience of purpose built student accommodation. Subsequently this has developed over the years with facilities that are akin to private residential homes such as swimming pools, gym and games facilities. Unsurprisingly there has been a large amount of investment poured into America’s student accommodation that offers investors a stable asset.
Germany is one country to be watched. Yields for student accommodation are around 4 percent as the country has enjoyed a 35 percent increase in international students over the last five years with the introduction of more English-taught courses. Germany benefits from a relatively low cost of study which is another enticing factor and adds to its student population annual growth. As a result the private student accommodation is growing fast and EUR 750 million was invested in 2016. This year this figure is expected to exceed EUR 1 billion.
One notable fact for Australia is the distinct lack of supply. This immediately creates an attractive base for any investor as it helps to push up yields. Over a quarter of Australia’s student population are from overseas, mainly from nearby Asia. Whilst supply issues occurring across all states, Sydney is one city that stands out the most. Only 9 percent of the student population resides in purpose built student accommodation creating a real opportunity for investors on a mass and grassroots level.
For those looking to venture into a less traditional market then Poland could be the one. The first point to take heed of is the staggering increase in international students. Despite this coinciding with a decline in domestic students, overseas students have jumped up by 652 percent in the last 12 years. A result of programmes promoting Poland as a place to study. The country’s student accommodation does not match levels found in other ‘mature’ markets. The rapid rise in international students has been driving demand for private student accommodation, which Poland desperately lacks. Currently the vast majority of student accommodation is publicly owned. So investment firms have eyed up this chance and are building suitable accommodation to meet demand.