Beyond the US and UK: 3 emerging PBSA markets investors & managers must keep an eye on

The student housing markets in the US and the UK are resilient, and they have reached a point of maturity. As the number of international students continues to grow, the demand for privately built PBSA will continue to rise in these locations. However, the changes in international student mobility trends point toward the steadily rising importance of other countries as centers of education. This, in turn, presents an opportunity for investors, developers and student housing managers to expand their portfolio.

As a market that has always been undersupplied, PBSA continues to witness higher rates of occupancy and yields high ROI. Investors, managers and developers have shied away from emerging markets owing to the lack of significant volumes. However, this is changing and Germany, France and Australia have received record investments in the last couple of years. Established real estate investors and REITs are already snapping up pioneering portfolios in international locations and we could see these markets consolidate over the coming years.

Whether you are an investment firm, a property management company or a student housing developer, opportunities abound in the following markets:

1) Australia

With 26% international students in its student population of 1,410,000, Australia boasts of a rapidly growing education sector. The country witnessed a growth of 2.7% in 2015-16 and has a very low provision for PBSA at just 6%. Increasing demand and limited supply, in combination with an ambitious plan by the government to attract more international students, make Australia an attractive market. Australian PBSA yield a high 6.0% net initial yield (lease).

2) Germany

With international students comprising 12% of the total student population and annual student growth of 2.2%, Germany is a rapidly growing market for PBSA. The country has seen sustained student growth for the last 9 years and the government has programs in place for increasing international students – courses offered in English language and the low costs of education are powerful reasons behind this growth. The market has 11% provision for PBSA (number of students / total PBSA beds) and has attracted investments of €705 million in 2016 and over €1 billion in 2017. Germany’s PBSA yields 4.0% to 7.5%.

3) France

With international students making up 12% of the total student population of 2,551,000 and annual student growth of 3.2%, France has a student population marginally smaller than that of Germany. Changes to the Visa system in 2015 have made France a more attractive destination for international students. Low fees and the growth in the number of courses offered in English are likely to fuel further growth. The market has 15% provision for PBSA and yields 4.25% to 5.25%.

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Key resources
Savills World Student Housing Report 2017-18
JLL European Student Housing Report 2017 

Originally published Oct 16, 2017 12:10:23, updated Jan 29 2024

Topics: Student Housing