■ Demand: Technology continues to revolutionise the higher education sector, with some institutions offering online-only courses for a fraction of the cost of an on-site course, or even for free. While major expansion of such courses could impact the need for accommodation, for most individuals, the first-hand experience of living and studying in a new environment will remain a major part of the undergraduate experience. As a consequence, we expect that physical institutions will continue to be the focus for higher education in decades to come.
■ Investment: It will be some time before the outflows of institutional investment capital seen this year from North America into the UK are extended into European or Australian markets due to limited opportunities. There is however scope for entrepreneurial capital and we expect some private money and operators to venture into these markets, especially cash-rich organisations who have cut their teeth in the UK and then disposed of those assets.
New stock developed now will pave the way for institutional investment in the future. We expect that the right income-producing stock in the right markets will find global investors and see yield compression in the medium term.
■ Threats: The UK has already adjusted its tuition fee structure and Australia may be following suit with higher fees on the horizon. Europe still offers students value and we anticipate it will garner a growing share of the globally mobile student population. Conversely, the US is planning to combat its high fees (for domestic students) by linking federal aid to institution quality, so that students at better-performing institutions receive larger grants and more affordable loans.
■ New Niches: A Hobsons 2014 survey found that 51% of prospective foreign students globally came from a home with a combined household income of less than $25,000 (£16,000). While not all of these will end up studying in markets like the US, UK and Australia, this counters the perception of foreign students as wealthy. It also points to the huge untapped demand in the Western market for lower-cost education and student accommodation.
Regional hubs of higher education are emerging as alternatives to the established Western centres. Dubai is the number one destination for students from the Middle East region, host to branch campuses of Western institutions. We can expect to see more regional hubs emerge, tapping into the large, lower-income tiers of students currently unable to stretch to Western institutions.