Trends in higher education student enrolment have continued to diverge among the most globally-important markets. In the EU, total student numbers in France and Germany grew by 3.2% and 2.2% respectively in 2015/16. Numbers increased by 0.7% in Spain and fell by 1.4% in Italy and over the same period. UK numbers are largely flat, partly in response to rising tuition fees and declining part-time study (although first year undergraduate numbers are up 2.4% since 2014/15). Growth in Australia continues to be driven by overseas students, total numbers growing 2.7% in the most recent annual period.
Trends in higher education student enrolment have continued to diverge among the most globally important markets
FIGURE 7Trends in student numbers
Source: Savills World Research using national statistics
International student trends
Rapid growth in international student numbers has underpinned demand for high quality PBSA across the globe. Some 4.6 million students studied abroad in 2015, an increase of 130% since 1999. This figure is forecast to reach 8 million by 2025.
China, by far the largest outbound market, accounts for 17% of all international students globally (in 1999 they only comprised 6%). A forecast decline in the number of university aged students from China over the next decade will be offset by further growth in the middle class. China’s outbound mobility rate is 18.5 students in every 1,000, compared to the mature markets of France (33 per 1,000) and Germany (39 per 1,000), implying room for growth.
Many countries recognise that the internationalisation of the student sector brings benefits to the domestic economy and have adopted strategies to attract more. Among European countries, the introduction of English-taught programmes (ETPs) have been central to this. The Netherlands offers the most, followed by Germany, Sweden, Denmark and Spain.
International students deepen the pool of talent for business, offering newly acquired (but overseas paid-for) skills. Australia, France and Canada all have ambitious international student recruitment targets (see Figure 8).
FIGURE 8Selected international student recruitment targets
Source: Savills World Research, British Council *projection
Beyond the country rankings
For many university students, particularly those from overseas, university rankings are a first port of call in choosing a place to study. The UK and US dominate the top QS 500 (see Fig. 9). Highly-ranked institutions therefore benefit from a broad and sustained demand base if they maintain this mark of quality. This is important to providers of PBSA. But other countries are making their mark. Seven Chinese universities feature in the 2018 Times top 200 ranking, up from just two in 2014. This is at the expense of the US, with 62 in the top 200 (still the most globally), down from 77 in 2014.
FIGURE 9QS World University Rankings top 500 by country
Source: Savills World Research using QS
▲ Simmons Hall at MIT
PBSA in uncertain political times
PBSA’s income producing qualities, stable demand base and counter cyclical qualities have supported its massive expansion as an asset class. But the sector is not immune from the impact of world events. The internationalisation of education, so important to raising standards, has also raised political concerns, often around immigration. The reaction of politicians and policy makers to these concerns can create headwinds for the sector. What will Trump, Brexit and other global political events mean for PBSA?
Brexit: Some international investors saw the drop in the value of sterling following the EU-referendum result as a buying opportunity. Investment in UK PBSA continued unabated after June 2016, despite falling volumes in other sectors. International students, too, found themselves with a cost advantage.
The UK’s higher education sector enjoys an exceptionally strong international standing, built upon hundreds of years of university heritage. This will not be eroded overnight, but Brexit does bring some uncertainty, particularly around EU research funding, as well as the treatment of academic staff from the EU and the treatment of student immigration.
International student numbers remain a political hot topic in the UK, and in particular the way they are counted in migration figures. New exit check figures suggest that 97% of foreign students leave at the end of their studies. A migration advisory committee, tasked with examining the effect that international students have on the labour market and economy, could be a step towards better recognition of the cultural and economic contribution that international students make to the UK.
More UK branch campuses in the EU post-Brexit? The number of international branch campuses has risen by 57% since 2010, and today there are 311 globally, according to C-BERT. China is host to the most of these (39), a tripling in seven years.
The majority of branch campuses are linked to US institutions (109), followed by the UK (45). To date, most of these have been established in Asia, tapping into fast-growing markets. Only four are located in mainland Europe, but a year on from the EU referendum, Kings College London is considering deepening its existing collaboration with Technische Universität Dresden to establish a new site for the UK institution in Germany. The plan would maintain access to European research funding post-Brexit, while giving TU Dresden better ties to London.
Trump: Trump’s rhetoric on immigration has been a concern for the sector. Greater oversight of the H-1B visa could impact universities’ ability to hire skilled staff from abroad. It would also make it harder for students to get jobs in the US on completion of their studies, thus impairing the country’s appeal as a place to study. We expect the impact on overall enrolment to be limited, however. Despite being the world’s number one destination for international students by number, foreign students make up just 5% of the total student body.
Macron: Emmanuel Macron’s victory looked like it would change the higher education landscape in France, with proposed policies to support higher education funding, improve student mobility and make accommodation more accessible. But the overarching need to cut the deficit (and commitment to do so without raising taxes) means that extra budget for the sector now looks unlikely.
■ PRIVATE SPACE, COMMUNAL OPTIONS: As long as their budgets allow, students will always opt for a private space, whether that’s a private room in a shared flat or a studio apartment, as opposed to a shared room. But even in properties that offer mainly studio rooms, students still value communal spaces.
■ EVERYTHING UNDER ONE ROOF: There’s significant demand for onsite social spaces, gyms and entertainment areas
■ ALL-IN COSTS: students are increasingly factoring in total costs for accommodation, not just the rent. Extra costs for amenities are recognised as a saving elsewhere (e.g. gym membership).
■ STUDY SPACE: a comfortable study space away from the bedroom is a must. These facilities are now among the most used.
■ LOCATION REIGNS SUPREME: The majority of students would still prefer to live somewhere closer to campus, as opposed to a property with impressive facilities that is not conveniently located.
Occupancy trends among students studying abroad
Data from Student.com shows that students from the Middle East and China typically take the longest tenancies, 90% and 87% respectively for a full academic year. Those from the US and Pacific Asia (including Australia) are most likely to rent for shorter periods. When it comes to room type preferences, there is relative uniformity across the globe. Students from the Middle East are slightly more likely to rent an entire place or studio, however, echoing larger average budgets.
FIGURE 10Tenancy type by source market
FIGURE 11Room type by source market
Cost of living and study: London becomes (slightly) more affordable
Weak sterling has improved London’s affordability for international students, slipping behind Sydney in our cost of living and study league for the first time. It now stands fifth in our global cost of living, accommodation and tuition ranking.
The US remains by far the most expensive market for students to live and study in. High tuition fees coupled with high accommodation costs make Boston, New York and San Francisco the most expensive markets globally, 20% above Sydney, the next dearest.
Mainland European cities stand apart for their affordability and are well positioned to attract cost-conscious globally mobile students. Prague, Berlin, Vienna and Warsaw are the cheapest cities in which to study, on par with Shanghai. Tuition in these cities is low (or even free), accommodation costs are half our sample average, while quality is improving thanks to growing PBSA development.
FIGURE 12Monthly cost of international student living, accommodation and study
Source: Savills World Research, Student.com
▲ University of London