Student housing: a lucrative investment asset at times of political & economical concerns.
We have previously discussed the merits of investing in student housing in the UK, but why is form of investment back on the cards again? In Savills’ recent report ‘World Student Housing’ a number of facts were revealed reinforcing student housing as a wise investment asset.
Last year USD 16.4 billion was injected into student housing across the world. The highest figure to date. This is at a time when the state of the global economy has meant that many investors are turning to alternative forms of investment to generate a good return. There has been a move away from traditional markets such as stocks and shares and other forms of property as the global economy takes steps to rebound to its former self.
Student housing is seen to be stable. The thirst for good quality education remains high. Many students seek this in countries with well established education institutions. In 2015 approximately 4.6 million students went overseas to study. A staggering 130 percent hike since 1999 and a figure that is expected to stand at 8 million by 2025. In fact the Chinese are the biggest nation making up international students accounting for 17 percent.
The investors contributing to this record breaking injection were a mix of institutional investors, sovereign wealth and pension funds. All of whom focused mainly in the UK and US in their search for a sound investment and undeterred by the recent political changes of both countries. The US receiving the most investment at USD 9.8 billion. The biggest transactions according to Savills being that of the USD 1.9 billion deal of Harrison Street’s buy-out of the Campus Crest REIT.
However, other countries have also performed well. Germany enjoyed a 380 percent increase in volumes last year. France 245 percent as demand continued on an upward trend. This coincides with an increase in student numbers of the two countries by 2.2 percent and 3.2 percent respectively for academic year 2015-16. Consequently there is likely to be a move away from the traditional markets over the coming years.
Why a success?
Student housing has developed over the years. Rather than just a place to sleep, they have evolved to meet the demands of those occupying them. Purpose built student accommodation needs to fulfill a number of key variables.
Firstly, ease is of paramount concern. This means that it needs to be fully equipped for everyday living. They should include social spaces, exercise areas, communal living but also provide private space too. Hence a private room rather than a shared flat or studio is more preferred. Plus all costs need to be included in the rent. Allowing students to budget and not to encounter any unexpected costs. Finally, just like most searching for the right property, location is vital too with a need of being close to campus.
This can all be achieved when student housing is purpose built and on a mass scale. Investors should take heed of these desires in order to pick the accommodation with the best return for a successful investment.
Coming next…
Stay tuned for the next in our series on student housing as we look at the different markets to capitalise on.