Investment into the global, purpose-built student accommodation market has seen rapid expansion over the past 24 months.
Investment into the global, purpose-built student accommodation market has seen rapid expansion over the past 24 months, led by record investment levels and surging student numbers, according to the latest Savills World Student Housing Spotlight.
After a record breaking 2015, when US$14.9 billion was globally invested, it was evident that student housing has grown from a niche investment into a global asset class.
Conal Newland, Director Savills Student Accommodation said “Student housing has proven itself to be a resilient asset class to date, and with its counter-cyclical fundamentals many institutional investors are turning to the sector where they can achieve strong occupancy and rental growth.”
As an emerging market for student accommodation, transactional activity is limited in Australia as assets are generally tightly held.
Savills research indicates that there is more than AU$2 billion of capital earmarked for development projects in Australian student accommodation.
Mr Newland also noted that the growth in higher education enrolment has underpinned demand for student accommodation.
“During and shortly following the GFC the sector saw a boost to student numbers as the weaker job market pushed more people into higher education,” he said.
According to the latest Savills World Student Housing Spotlight between the 2006/2007 and 2010/11 academic years, student enrolment increased by an average 12% across the top seven internationally significant student markets. Australia enjoyed a very strong run with total numbers up 37% in the last eight years.
“Australia is a popular destination for international students, particularly from Asia where China and India together supply nearly 40% of international students,” said Mr Newland.
With such large numbers of students, Australia’s supply of purpose built student housing is failing to meet demand.
“The imbalance is acute, with only 7% of students accommodated in purpose-built student housing,” said Mr Newland.
With approximately 67,700 beds of purpose-built student housing in the eight Australian capital cities, all cities have an existing supply of less than 12% per full-time student with the exception of Canberra (27.8%).
The opportunities for pioneers in the student housing sector have never been greater.
View the Savills World Student Housing Spotlight.