High yields attract savvy investors to student housing sector

High yields attract savvy investors to student housing sectorStudent accommodation is proving to be an attractive asset class due to its high yields, exposure to the residential housing market and growing demand from internationally mobile students, Savills says.Research from Savills states that student housing reached a new high of investment in 2013, having grown from US$3.4 billion investment globally to US$7.2 billion over the last six years. The appeal of student housing as an alternative investment, Savills says, continues to rise, particularly given yields are in the range of 6 per cent to 7.5 per cent.New opportunities for investment are being created in purpose-built student accommodation across university cities in Australia, the US, UK, Germany, Japan, and Europe to meet increasing demand from internationally mobile students. Oversupply will not be a problem, Savills predicts, because the increase in student numbers over the past 10 years has left most higher education establishments short of accommodation.Savills’ research reveals the number of Chinese higher education students studying abroad almost doubled from 2007-11. There are now about 6,000 Chinese students studying abroad, making the country the biggest source market for internationally mobile students.Chinese investors are also increasingly showing interest in Australia’s student housing market as its investment potential becomes more popular amongst offshore buyers in general. Savills says today’s student accommodation market in Australia has expanded to include operators such as Iglu and Urbanest, whereas in the ’90s it was dominated by one key player, Unilodge.