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Say Jones Lang LaSalle in latest Global research
London, 6th November 2012 – Latest research by international property consultants Jones Lang LaSalle shows how over the last decade, the student accommodation market has started to emerge as a significant mainstream global investment category, attracting increasing interest from investors, developers and private operators.
The report looks at the factors that have contributed and influenced the growth of the sector in the UK and USA and then examines the potential for growth elsewhere in the world.
This year student accommodation investment and transactions in the UK will have exceeded $3 billion – over double the level seen in 2011. In the US, transaction levels are nearer to $2 billion.
Although sometimes described as an ‘Alternative’ investment sector, in these markets student housing is increasingly sought after by mainstream institutional investors.
Philip Hillman, Lead Director of Student Housing and Higher Education team in London commented: “Student housing is increasingly a global asset class;
Supply and Demand
The sector’s rapid growth has been underpinned by the rise in student numbers worldwide - growth has increased from 98 million in 2000 to 165 million by 2011 and is expected to reach over 263 million by 2025. Over half of these students have come from Asia, followed by Europe, Africa and South America. Such a rapid increase in demand has resulted in an undersupply of student housing and consequently an unbalanced student housing market.
Student Housing: an asset class
This imbalanced market has resulted in outperformance both in the UK and USA, outperforming other commercial real estate sectors delivering total returns of between 11%-15%. Stable income and solid rental growth plus resilient performance in downturns are key appealing attributes resulting in high occupancy rates where enrolments are rising at a higher rate than supply.
The Investment Landscape
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