Global investment into institutional student housing broke records in 2016, reaching €14bn ($16.45bn) and surpassing the previous annual record of €13.34bn ($15.6bn) set in 2015, says international real estate advisor Savills.
According to Savills, total volumes by dollar value increased by 5.4% globally in 2016 – double the levels seen in 2014 – as several newly built portfolios of scale traded for the first time and investors continued to recognise the mainstream investment opportunities in the sector and its role as a gateway to other residential assets. Investor interest was focused on the US and UK, the most mature global markets where the majority of investable institutional student housing stock can be found.
The US attracted €8.4bn ($9.82bn) of investment in 2016, up from €5.1bn ($5.96bn) in 2015 - a 65% increase and a new record for the country. The UK secured €3.28bn ($3.84bn) investment, its second highest volume ever, after 2015’s record-breaking volume of €6.19bn ($7.24bn).
Proportionally, western European countries saw the greatest growth in investment volumes in 2016, says Savills: student housing investment in France increased by 245% (from €49m in 2015 to €169m in 2016) and by 380% in Germany (from €154m in 2015 to €741m in 2016). Annual student housing investment volumes in the latter are expected to surpass the €1bn mark for the first time by the end of 2017, says Savills, with investment volumes across western Europe already up an average of 26% in the first six months of 2017.
Spain, Poland, Hungary, Portugal and the Czech Republic are also attracting attention as increasing volumes of purpose-built student housing are being delivered in these under-supplied markets says Savills, expanding the amount of investable product available in these countries. In September 2017, Spain saw its largest student housing portfolio change hands as AXA Investment Managers-Real Assets agreed to acquire a portfolio of 37 Spanish student accommodation facilities in a JV with US housing investor Greystar and a Dutch institutional investor.