The rise – and rise – of global student housing investment

The rise – and rise – of global student housing investment
The rise – and rise – of global student housing investment


Where once it was a niche investment, student accommodation has now become a global asset class.

According to the latest Savills World Student Housing Spotlight, 2015 was a record year for investment in student housing with US$14.9 billion invested globally in the sector.

The Local Market - Australia

The Australian market continues to attract significant attention and is a particularly popular destination for international students. Students from China and India together supply nearly 40 percent of international students, an increase of more than 13 percent and 15 percent respectively in 2015.

With Australia featuring in the list of favoured destinations in the world’s top outbound markets for international students, plus a fast-growing domestic population, student numbers have risen 37 percent in the last eight years. With 30 Australian institutions appearing in the top 750 of the QS World University Rankings, up from 25 in 2012, demand is likely to continue and, as a consequence significant new stock will be required.

The strong growth potential in Australia is set against a general shortage of supply; at the moment there is only enough purpose-built student accommodation (PBSA) available to accommodate 6 percent of the student population. In response, more than AU$2 billion of capital has been earmarked for development projects in student accommodation since the start of 2015.

Around the World

The Savills World Student Housing Spotlight has found that cross border investment in this fast maturing asset class accounted for 40 percent of all global investment activity. International investors who are seeking to diversify their portfolios have been attracted by the fact that US and UK student housing REITs have outperformed their All REIT indices by 19 and 16 percentage points respectively.

The first half of 2016 has seen lower total global volumes compared with 2015, but in mainland Europe investment levels have continued to rise off a low base. By the end of July, German student housing had attracted €350 million of investment – more than double the total invested in the whole of 2015 – while in France €345 million has been transacted in the year to August 2016.

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The rise – and rise – of global student housing investment

Investors have been attracted by mainland Europe's strong investment potential. Its combined student population of 20 million, and the very low provision in some markets of purpose-built student accommodation (PBSA) despite growing demand from international students attracted by an increasing number of courses taught in English, place it on an upwards trajectory.

A Resilient Asset Class

Growing international student numbers are therefore set to secure the market for a premium PBSA product, but there also remains a huge untapped market for more affordable private accommodation. High land values and development costs will impede this in many markets, but upgrading of existing university stock or establishment of new models may be a route in.

In either case, student housing has proven itself to be a resilient asset class and, with its counter-cyclical fundamentals, many institutional investors will continue to turn to the sector where they can achieve strong occupancy and rental growth.

To learn more about the trends in the current student accommodation market, view Savills World Student Housing Spotlight 2016.

Savills is a leading global real estate service provider offering the full spectrum of services from strategic advice to managing assets and projects and transacting deals. To learn more about Savills student accommodation services, visit

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