Asian investors capitalising on the fundamental growth in higher education globally

16 March 2021


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The accelerated evolution of the student housing investment sector globally over the past 10 years has firmly positioned student housing alongside traditional real estate sectors of office, retail and industrial/ logistics. No longer niche but very much mainstream and a valuable addition within a diversified real estate strategy.

Amongst the growing global interest, Asian-based investors including principal institutional capital, money managers, institutional aggregators and professional investors are increasingly investing in the student housing sector, many for the very first time. The attraction being stable returns insulated to economic cycles and underpinned by the long-term macro demographic fundamentals of higher education.

Asian investors like their global peers view the student housing sector as a lower-risk defensive real estate class. The growth in the size and affluence of the rising Asian middle-class from which the two most populous nations of China and India contribute the greatest international student enrolment growth resonates strongly with Asian investors. The attractiveness of investing very much aligns with the Asian connection to academia and overall high levels of university participation from the Asia Pacific region.

GSA has been actively cultivating and educating Asian real estate investors over the past several years, successfully raising both institutional and professional capital from South Korea, Japan, Singapore, Taiwan, Hong Kong and Thailand. We are seeing investor appetite continue given the historical lack or investment exposure, however student housing remains under-invested from the region.

The challenge for many Asian investors has been accessing the sector which has been very much dominated by investors from the US, North America, United Kingdom and Europe. Furthermore, the more specialised operational nature of the asset class requires the investors to consider factors such as which country(s), sub-markets, cities and or university towns to invest, asset operational considerations, university relationships and overall management of the investment. This tends to lead investors to investing with professional specialised managers which have an integrated student housing platform rather than directly owning/managing the student housing.

Our experience and capital raising success to date indicates Asian investors particularly smaller local investors prefer to adopt a diversified investment approach by gaining exposure across several key student housing markets globally, such as United States, United Kingdom and Australia. Larger institutional investors tend to take a more bespoke approach investing by country or regional-specific student housing strategies.

As the “virus fog” lifts with reducing cases and global vaccine rollouts, Asian investors look set to continue their investment allocation to student housing as a meaningful sector diversifier in their real estate portfolios. Whilst student demand and global student mobility has been artificially reduced with temporary border closures, investor appetite has remained strong, in some cases, even increased during the pandemic.

The enduring link between the Asian mentality for academic success and higher education participation will not only underpin investor demand but also continue to drive further capital allocation for exposure to the student housing sector globally.

Victor Lor is Head of Capital, Asia Pacific, for GSA