The UK investment in student accommodation has been growing for some time, and this is a well known fact in the UK.
Growth in demand has meant a need for private sector accommodation to pick up the slack when universities themselves have not got the ability to house all of their students. It has meant that there has been almost £12 billion of investment in student accommodation between 2013 and 2015 alone.
This activity in the sector, pushed forward by demand from students, has helped the student property market move from a place in which it was seen as a niche asset into a position of power, where it is now viewed as one of the most thriving investment options around. But this is not a trend exclusive to the UK, as a new report from Savills has revealed.
Savills’ 12 Cities: Visitor Cities report looks at the major settlements across the world and how and why people either live or rent there, and it found that across the world, a swell in foreign students in particular has meant purpose built student accommodation (PBSA) becoming a mainstream asset class.
Drivers for growth
Savills said that the main reason we’ve seen investment in student accommodation demand rise across the entire world in the last few years is that demand has climbed in that time. A “rapid growth in enrolment” globally over the past four years has meant more and more students needing places to live, and the property market has responded positively, with investors keen to step in to fill the gap as required.
The driver behind this, the organisation said, is the global financial crisis. When it seemed like there may be fewer jobs around thanks to the drop in economic performance worldwide, more people who would have previously went straight into the working world decided to wait and see, instead heading to university as a lower-risk option.
This was especially prominent when it came to international students, who flocked to universities in top-performing nations like the UK, US and Australia in the months and years after the global financial crisis struck. The strong performance and reputation of institutions in these countries essentially won through, and they managed to attract more cautious students as a result.
Between the start of the global financial crisis and 2013, the number of students worldwide who were studying outside their own country grew to around four million, which is a massive growth when compared to the two million who were doing so back in 2000.
The future of PBSA
The fact that the phenomenon of growth and the mainstream emergence of investment in student accommodation has been a worldwide thing rather than just something centred around the UK would seem to suggest that there has been a real long-lasting change, rather than a short-term blip, and that can only bode well for the future.
Savills also seems to suggest that there is a real chance the sector will continue to grow in a similar manner over the coming years rather than resting on its laurels. Globally, Savills’ report states, students who are studying outside their own country are set to grow in number to eight million by the year 2025, which will mean more demand, and more need than ever before for the private sector and its investors to grow stock levels in the PBSA.
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