Global investment into purpose-built student accommodation hits new high
Global investment into purpose-built student accommodation was a record US$16.3bn in 2018, surpassing the previous high of $15.9bn in 2017
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The investment case for student property is a compelling one. Demographic change, as well as increases in state funding, have underpinned a rapid increase in student numbers globally over the last decade.
Meanwhile, the search for relatively low risk investments with good returns is drawing more investors to the sector. Increasingly, they are also looking to diversify out of home markets.
Global investment into purpose-built student accommodation (PBSA) was a record US$16.3bn in 2018, surpassing the previous high of $15.9bn in 2017. Cross-border capital has accounted for approximately 40% of this total investment over the last three years, data from RCA shows. This compares to an average of 26% across all real estate sectors.
Investors from the United States have been the primary source of cross-border capital, spending $7.5bn on PBSA over the past five years. However, the balance of power is shifting. The outflow of capital from Asia-Pacific has eclipsed that from both Europe and North America in two of the previous three years.
In fact, investment from Asia Pacific into student property markets around the world has risen by 47% in the last five years, RCA data shows. In 2017 alone this equated to $3.5bn. This figure was more muted in 2018 reflecting the fact that levels of cross-border investment were down globally, amid a slowdown in economic growth around the world and a more cautious investor appetite in the second half of last year.
Notably, however, Asian investors were under bidders on a series of significant student property transactions in 2018. Given the economic performance within Asia Pacific in recent years, its emergence as a more influential player within the market is no surprise, but this shift in capital flows will play a significant role in shaping future PBSA markets.
Our Global Student Property Report 2019 examines the key global trends driving growth in what is now a globally-recognised asset class. In addition, the report takes an in-depth look at student property markets in the UK, Europe, the United States, Australia and India – drawing on Knight Frank's global network of specialist student property and research teams as well as comment from industry specialists including Unite, Scape, CA Ventures and WP Carey among others.