The location may change, but it's still key for successful property investment

25th April 2019

The location may change, but it's still key for successful property investment

It’s clear that higher education is increasingly becoming a global business, with the number of international students expected to exceed 7 million by 2020, up from just 4.1 million in 2014. 

Since 2010, over 80% of all investment in to purpose built student accommodation (PBSA) in Europe has been focused on the UK market, accounting for over €18 billion, compared to €4 billion for the rest of Europe.  This appears set to change as investors turn their attention towards continental Europe and less mature markets that are however underpinned by the same key principles.

But what are the key fundamentals when looking to invest in PBSA?  The fundamentals are very much the same for the international students that you are looking to attract, namely the quality of the institutions and the education on offer.  This includes the international recognition of the universities as well as local attitudes towards students, the ease of getting a visa to study and an understandable desire to remain safe while studying abroad.

Looking at these fundamentals it is easy to see why the USA and United Kingdom account for 30% of all international students.  English is the primary language in each of these locations and both countries provide institutions at the upper end of global university rankings and a safe working environment.

The recent political turmoil in both countries and an increased risk of uncertainty when it comes towards international students attempting to obtaining a visa are also impacting on the landscape.  European universities are conversely awakening to the opportunity and introducing more courses in English (English Taught Programmes - ETPs), as illustrated in the fact that there are now more than 6,000 available, compared with only 500 in the key European markets in 2007/08.

The Netherlands is leading the way and now offers the most ETP courses with 2,068 available in 2014/15, with other markets, also actively increasing the number of English language based courses on offer. The higher education institutions in continental Europe are also very welcoming to international students, largely encouraged by the significant economic contribution they make.  

There is also a growing middle class in countries such as Nigeria, India and Vietnam where wealth per capita is not as high as it is in China, Hong Kong or Malaysia. These countries are increasingly sending promising students abroad to gain internationally recognized qualifications although many are opting not to attend top tier universities such as Harvard, MIT, Imperial or Oxford, instead targeting markets with lower tuition fees and cheaper accommodation costs.

This trend is illustrated in student numbers in countries such as Germany and the Netherlands which have seen significantly stronger student numbers than those in the UK since the turn of the century, increasing by more than 35% respectively compared to 11% in the UK.

Location has always been the most important factor when determining both the attractiveness and subsequent value of a property investment.  Although many of the fundamentals remaining the same, the actual location of the opportunities is evolving and new markets emerging.

Figures from JLL suggest that higher education is set to become a $70 billion industry by 2020, with the world’s leading universities all competing to attract the best talent available.  Collegiate AC is well placed to take advantage of this opportunity as experienced international and qualified operators on the ground and an active group of investors supporting the business in delivering its award-winning accommodation to new and existing markets.

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