Why student accommodation
1. Underpinned by supply and demand imbalance
2. Rapidly growing sector – Investment up 780% since 2009
3. Best performing property sector since 2011
4. High occupancy rates – multiple small tenants
5. Low cyclical volatility
6. Less volatile yields
7. Low risk profile
8. Robust income and rental growth- Annual appraisals
9. Increasingly liquid market
Structural Demand
- Europe has more top universities than any other region of the World
- The UK houses the second largest number of the top institutions after the USA
- There has been a flight to quality in university demand
- Growing international demand is complimenting recovering domestic demand
International Demand
The OECD predicts that 7 million students will be studying outside of their country of birth. This compares with 4.1million in 2010. Increasingly European institutions are offering their courses in English to attract international students
Demand – Flight to Quality
Increasing demand for higher ranked institutions : Higher university fees mean students are questioning their ‘value for money’ and choosing institutions with better employment prospects.
Higher-ranked institutions are better placed to offset lower domestic demand by attracting international students.
International Demand
Indian and China will increasingly drive the growth of the middle class
Numbers (millions) and Share (Percent) of Global Middle Class
Supply of poor student accommodation
- Nearly 60% of student accommodation is of ‘Low Quality’ due to lack of investment.
- The private sector has been absorbing all of the growth in demand for term-time accommodation. Universities have not been investing in accommodation.
Supply – reliance on the private sector
- Private sector filling supply gap
- PBSA can make up the shortfall and help solve the housing crisis
Recent investment growth in UK PBSA student accommodation asset class
