Research article

The case for student housing investment

Student accommodation remains an attractive asset class for investors, underpinned by the sector’s strong fundamentals

Student accommodation has evolved from an alternative asset class into a mainstream investment which now attracts a variety of global institutional investors. High income returns attracted the first investors to the sector, but as the sector has matured and yields have come in, investors are now drawn to student housing’s counter-cyclical income stream. In economic downturns, demand for student housing tends to increase as students prolong their studies while they wait for the job market to improve, while those out of work return to university to upskill.

Internationally mobile students grew by 64% to over five million

Savills World Research

Internationalisation of higher education

International students, unfamiliar with local housing markets (and often with higher budgets), are an important demand base for purpose built student accommodation. Many countries have realised the benefit of international enrolment to universities as a tool to fuel the domestic economy, and are now actively encouraging international recruitment.

Between 2007 and 2017 the number of internationally mobile students grew by 64% to over 5 million, according to UNESCO. The US, UK and Australia are host to the largest number of them. Australia, benefiting from proximity to the major Asian source markets, has seen international student enrolment into higher education rise 41% between 2012 and 2017. The number of international students increased by just 8% in the UK over the same period.

International students numbers in mainland Europe are rising rapidly too, attracted by English Taught Programmes and lower cost tuition.

Future growth in outbound student numbers is expected to continue to be driven by major source markets China and India. Their rate of growth is forecast to slow to 1.7% per annum by 2027, however, from an average of 6% between 2000 and 2015, according to a British Council report.


Despite a rise in student numbers, and in turn investment, student accommodation remains largely under-supplied at the national level. Student housing provision rates (number of beds / full time students) in major markets range from 34% in the UK to just 10% in Australia.

Figure 6

Student housing provision, selected national markets
Source: Savills Research

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