Investment in student accommodation saw another record year in 2017, with $17.5bn invested globally, up by 4% from $16.9bn in 2016. The UK and Western Europe accounted for over half of this investment (51%, $8.9bn), a 35% increase from the $6.6bn invested in 2016. The UK, Germany and Spain were the most active single country markets in Europe.
This increase in investment is underpinned by the growth in international student enrolment, which continues to drive the demand for high-quality purpose-built student accommodation (PBSA) globally. Nevertheless, data from StudentMarketing highlights that the provision of PBSA across Europe remains extremely low.
Provision is highest in the UK where 27% of students can be accommodated, and lowest in southern Europe. For example in Italy, which is Europe’s fourth largest student market with circa 1.7m students, the national provision rate is less than 5%. Rome has the lowest provision in the country with a student population of circa 220,500 and only 6,500 PBSA beds (a provision rate of 3%).
Spanish cities are also characterised by extremely low levels of supply. Barcelona is just under 5%, while Madrid stands at 5.7%. To bridge this gap in demand, GSA Coral has and intends to invest further in the Spanish market. The Spanish portfolio includes four operational assets in Madrid and Alcala de Henares, with two further assets under development in Barcelona. The Barcelona assets will become operational in 2019, further strengthening GSA’s Spanish portfolio. Other key cities are being targeted to benefit from the low provision rates.
The strength of the sector is set to continue throughout 2018, as Savills’ recent Global Living report highlights global investment volume for student housing totalled just under $8bn for Q1 and Q2 2018. At this current rate, investment volume is on target to match the past two record-breaking years.
As the sector continues to perform strongly, GSA Coral remains committed to capitalising on global investment opportunities which further diversify the portfolio in new and existing markets.