Student housing in Europe is the latest target for investors keen to cash in on the booming property sector.
A new fund is setting up in Guernsey with the sole aim of buying in to existing student halls of residence and investing in selected new developments.
The Victus European Student Accommodation Fund has a £10 million war chest ready for the first investments.
Fund property adviser James Metcalf, of the Crosslane Group, said: “Our research shows the European student accommodation market is lagging the UK by 10-15 years. A lack of open market transactions gives investors a good chance of high returns.
The fund wants to link with partners for student housing developments at universities across the continent.
Demand for housing
The expected return is targeting between 10 and 12% a year.
The first purchases by the fund are expected to soon.
Many corporate investors have spotted opportunities in the European student housing market.
Studying in Europe is now much cheaper for non-European Union students after tuition fees were hiked to £9,000 a year in England at the start of the last academic year.
Economic woes afflicting the Pound and Euro also make coming to Europe cost-effective for many overseas students.
The majority come from the emerging markets in the Asia-Pacific region – especially China.
And as emerging economies look to add skills to increasing numbers of youngsters, European universities are expanding to offer courses but lack on-campus accommodation.
Student numbers quadruple
Even companies like IKEA have announced plans to invest in student accommodation, with the firm looking at putting money in to developments in The Netherlands.
Meanwhile, a market report from analysts Bouwfonds REIM suggests most European universities lack good student housing and current developments fall well short of demand, which is pushing up rents.
The report assesses the student housing market as anti-cyclical, high yield and low risk, as housing can easily be sold or adapted.
Figures released by the firm suggest the number of non-European Union students coming to Europe to study has quadrupled since 1975- and is forecast to continue to grow.
The firm’s head of research, Dimf Ghijsels, said: “If the general property market is not performing well, investors like to look alternative sectors with better returns. Student housing, especially in Europe is one such sector.
“Many investors have yet to discover the opportunities, mainly because the market has been overlooked in favour of the more mature UK student housing market in recent years.”