Student Housing Investment Shows Top Class Honours

Booming emerging market populations with cash to send children to study at overseas universities is triggering a real estate boom on both sides of the Atlantic.

Student accommodation investment has already doubled in Britain in the first three quarters of 2012, with £2 billion invested.

While in the US, developers are not far behind, sinking more than £1 billion in to student housing in the first nine month’s of the year.

Although British student numbers are dropping, plenty of international students are ready to take their places at leading universities.

They come from rich families in India, China, the Asia Pacific and Brazil, who have expanding economies and aspire to educate their children.

Studies have also shown that the number of students seeking degree courses grows in times of economic hardship as a haven against unemployment.

Student numbers yet to peak

Student property, according to global property consultants Jones Lang LaSalle and CBRE, report more than 90% occupancy and topping 10% yields in the UK and US – better than just about any other investment class.

Philip Hillman of Jones Lang LaSalle, London, said: “Student accommodation is increasingly a global asset class because students are increasingly international and mobile, which allows developers and student accommodation operators to operate across continents. Investors are increasingly investing overseas.”

Student numbers are rising across the globe – from 98 million in 2000 to 165 million in 2011. Forecasts predict numbers may peak at 263 million by 2025.

More than half come from Asia, followed by Europe, Africa and South America.

Soaring demand for places has swamped university accommodation.

In Britain, all the halls run by the universities and corporate landlords can only take a fraction of the number of students.

Emerging markets

The demand is for around 3 million bed spaces – Britain’s largest corporate provider, Unite,, has around 44,000 beds nationwide.

A recent report in to student accommodation investment in the UK and US highlights opportunities for investors in the less mature European market

“Institutional investors need scaleability, the potential to secure significant operational portfolios with a development pipeline. The biggest barrier to major financial institutions investing in many of the emerging student accommodation markets is the lack of quality stock,” said Hillman.

“Emerging markets in Europe should benefit from an accelerated acceptance of the investment characteristics of the sector as a result of the growth of the UK and US markets.

“Looking towards the emerging markets, mainland Europe is around 10 to 15 years behind the markets of the UK and the US. There are few open market transactions at the moment but there are real opportunities for growth.”

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