October 25th, 2016
As the student property market has hit the mainstream in the UK over recent years, more attention has been paid to the growing need for quality accommodation across the country. Studentpodshop has covered at length the shortfall in available student housing across the UK which, according to many, is approaching crisis point.
As student numbers continue to soar there simply isn’t enough available housing in the most popular university destinations such as Manchester, London, Nottingham and Bristol. Private investment is tackling the problem slowly but surely as strong yields and secure capital gains entice investors into the market. The popularity of investing in Purpose Built Student Accommodation has been growing for years due to the financial rewards and flexibility on offer, but could we now be seeing our continental and Transatlantic cousins following suit?
There has been a significant increase in the number of property investors acquiring student housing assets in mainland Europe, new research shows. Fresh market analysis by Savills revealed that countries in Europe saw 21% year-on-year growth in student property investment as of Q2 2016, reaching a total of £1.45bn.
In volume terms, the UK and US markets still received the most investment into existing student housing assets in the first half of 2016 at £1.1bn and £4.3bn respectively. As of Q2 2016, year-on-year investment volumes of existing student housing stock grew by a staggering 82% in the US, following trends in the UK after reaching an exceptional high in 2015 due to the acquisition of a few large portfolios.
With a combined student population of around 20 million people, growing international enrolment of foreign students and a very low provision of purpose built accommodation, Europe offers strong investment potential.
In particular, €350m (£315m) was invested into German student housing in the first seven months of 2016 which is more than double the total invested in the country’s student housing sector in the whole of 2015. France has seen a massive €345m (£310m) being invested up to August of 2016.
Cross-border investment continues to grow with reports that global investment outside the country of origin has accounted for 40% of all deals in the sector over the past three years. Investors have sought to diversify portfolios, with large outbound flows from the US, Canada and Singapore heading into the UK and continental European markets.
As international investment grows, and the performance of student property attracts more attention, we can expect both inward and outward investment across the UK, Europe and the US. Investors seeking high performing, diverse portfolios can now build them across borders in the knowledge that the appetite for higher education will not slow in the coming years. Counter to post-Brexit fears, the young people who will be attending universities still hold strong internationalist beliefs and ambitions and this should see a continuing influx of students from around the world.