The latest Spotlight World Student Housing report from Savills has indicated that record levels of investment has propelled student housing into the mainstream.
Until recently, student housing investment was thought of as an alternative asset class however, rising investment in the sector had led the experts at Savills to predict that the asset class will become ‘increasingly well-established in a variety of countries.’
The report cities ‘increasing world prosperity and a growth in the middle class in many emerging economies’ as reasons behind rising student numbers and rising investment in the sector across the globe.
According to the report, the UK witnessed a record breaking $6.5 billion worth of investment in the first nine months of 2015.
Rising demand for student housing
The ‘university experience’ where students live away from home to study is a universal rite of passage for many. Whether students are moving to a new place within their home country or are moving abroad, the need for safe, high-quality accommodation in a supportive environment is integral.
In world where technology is rapidly changing and improving, savvy students are motivated more to study at the world’s best universities.
The report outlines that for host countries such as the UK – which is home to some of the most sought after higher education establishments – the purpose-built student housing sector has become an established asset class.
“Western markets have led to a surge in domestic student numbers, driving the need for student accommodation at home and further boosting demand for accommodation. This has helped to make student housing performance less cyclical than some other property asset classes, providing investors with stable income flows, low voids and a solid demand base,” the Spotlight World Student Housing report states.
“…student housing is now firmly established in the UK and US and the sector now has increasing appeal to institutional investors who are actively participating in the market,” the report continues.
The UK is home to 2.3 million students of which 388,000 are international students (17%). There are currently 524,000 purpose-built student rooms in the UK which equates to 23% of the national provision rate.
The report highlights that the asset class will continue to attract investment due to the imbalance between supply and demand.
“Top-tier university cities in the UK with low supply have the greatest potential,” Paul Tostevin, Savills World Research comments.