Many countries are experiencing a fall in their student-aged population, which makes international students particularly important. Improving higher education standards across the globe are broadening choice and making the competition for international students greater than ever
Growth in higher education enrolment
Between 2012 and 2017 the total number of students in higher education has increased by 11% to exceed 220 million. While favourable demographic shifts have driven growth in some markets, many nations are grappling with slowing growth or a declining student age population. In order to counteract this, a number of countries are actively increasing their appeal to international students.
Over the past five years, India has seen the strongest growth in higher education enrolment, increasing 22% over the past five years (see chart).
India’s university-age population grew by a modest 3% over the same period, suggesting rising wealth is making university more accessible for a growing share of the population. By contrast, many major student markets, including the UK and US, have seen the size of their university-aged populations decline over the same period.
The number of students studying in Australia has also grown substantially over the last five years. Australia has benefited greatly from its geographic proximity to major Asian source markets such as China. The number of international students enrolled in higher education in Australia now accounts for a little under a third of total students.
The United States remains the largest market for international students, host to one million international students (but only 5% by share of total students). The UK is the second largest market for international students by number with 460,000, closely followed by Australia, host to 430,000. Together, these three countries account for a third of all globally mobile students, according to UNESCO.
The internationalisation of higher education
As the number of globally mobile students has grown, new countries have opened up to capture a share of the international market. Competition for international students has never been greater and institutions need to do more in order to attract students looking to study abroad.
One method universities across Europe have used to attract more international students has been to offer English Taught Programmes (ETPs). They are particularly beneficial in countries where the local student age population is declining or growth is slowing. ETPs also have the benefit of allowing the university to prepare its students for a global world and remain competitive on a global stage.
The number of ETPs being offered at European universities has surged over the past ten years or so, with the numbers of English Taught Bachelor (ETBs) degrees increasing to 2,900 in 2017 compared to just 55 in 2009.
The Netherlands has one of the highest offerings of ETPs in Europe. In the academic year 2017-18, 23% of all bachelor degree programmes and 74% of all masters degree programmes offered by Dutch universities were entirely in English.
Growth in the number of ETBs on offer has slowed in recent years. There is also concern that ETPs hinder native speakers from being able to participate in dual programmes, and they have also been accused of undermining native languages.
The Association of Universities in the Netherlands put out a plan to cap English-language student numbers to prevent Dutch speakers being squeezed out of dual programmes. In Denmark, the government cut around 1,000 English-language places at universities in 2019, claiming that too many international students leave the country after they graduate.
Beyond English, the opportunity to attract French and Spanish speakers should not be overlooked, as they are the fourth and fifth most spoken languages in the world (see chart).
The top international source markets in Spain, after Italy and France, are Ecuador, Colombia and Mexico, all Spanish-speaking nations. In France, French-speaking Morocco is already the top international source market, and China, Algeria, Tunisia and Senegal round off the top five. In a global marketplace where more and more institutions are chasing the English-language market, the ability to cater to these fast-growing groups is an important point of diversification.
Forecasting the future major source markets
Asia, largely China but also other nations, have long been major sources of international students for market such as the UK, US and Australia. However, the growth in internationally mobile students has started to slow, with the total number of globally mobile students recording a marginal dip of -0.01% in 2017 compared to growth of 6.2% in 2016, according to UNESCO.
This slowdown can at least partially be attributed to a slowdown in outbound students from China, which remains by far the world’s largest outbound student market. Some 870,000 globally mobile students came from China in 2017, an increase of 24% since 2012 but only a 0.4% increase from 2016. Meanwhile, the total number of domestic students studying in China reached over 40 million for the first time in 2017, a 4% increase from the year before.
India is likely to rise in importance in the future. The country is already the second-largest outbound market for students and is forecast to overtake China as the world’s most populous country in the next five years, with a population of more than 1.4 billion people.
By 2024 India will be home to 251 million 15-24-year-olds, compared to China’s 159 million. Established markets for international students such as the US, UK and Australia are likely to benefit from this growth, as they already attract a high number of Indian students. But, other countries such as the UAE also stand to benefit as a study destination which is popular among Indian students, but less so the Chinese.
Countries such as China are improving their domestic offering for higher education. Between 2010 and 2020, a number of countries have increased their number of institutions within the QS University Rankings top 400. Russia has seen the largest increase, with 13 institutions within the top 400 in 2020 compared to just three in 2010. Mainland China is second-best improved, almost doubling their number of institutions in the top 400 with a total of 15 in 2020 compared to eight in 2010.
The US and the UK still remain by far the top two countries globally for universities within the top 400, with 75 and 45 respectively in 2020, followed by Germany (23) and Australia (22). But both the US and UK have seen a decline in the number of institutions within the top 400 since 2010, down from 86 and 47 respectively. Germany has also seen a decline and Australia has remained the same. This highlights how institutions in Asia, Latin America, the Middle East and Europe are improving their degree offerings. Many of the countries with an increase in highly ranked institutions are also major source markets for international students, giving students from these markets less incentive to study abroad.
Quantifying market potential
The UK is the most established market for student accommodation in Europe, and together with the US, it is one of the most mature globally. The UK has a provision rate of around 34% (defined as the number of beds to full-time students), the highest of any European country, and considered to be relatively fully supplied (though this does vary significantly at a local level).
To assess the potential of other European markets, we have applied the UK’s 34% provision rate to other countries to evaluate their potential scale. By this measure, both Italy and Germany have the potential to reach half a million students beds. Spain and Poland could reach 400,000 and 300,000 beds respectively, while the Netherlands could double the current supply to reach 240,000, based on a provision rate of 34%.
These figures are based on the number of full-time students. Domestic students in Southern Europe have a greater tendency to study in their hometown and live at home. Taking into account mobile students only, Italy has the potential to almost quadruple the current supply of beds while Spain could double the current number (see chart).
Canadian student housing market:
Canada is home to just over 1.3 million students, of whom 14% are international. Enrolment has risen by 5% in the last five years. The Canadian student housing investment market is relatively undeveloped but rising fast, having been all but nonexistent five years ago. Total transaction volumes stood at CAD$360m (US$270m) in the first half of 2019, more than the total volume transacted in all of 2018.
Canadian players dominate the market. Alignvest has been the largest investor in the last two years, in which they operate a REIT. Student assets typically trade at 200bps over multifamily, reflecting the relatively slim pool of investors in the country. At present, the market lacks sufficient scale for major Canadian outbound investors such as CPPIB, who have been active in international student housing markets.
Dominated by on-campus, university-provided housing, there are an estimated 150,000 beds in Canada, a provision rate of 15%, based on full-time students.
Parallels can be drawn with Australia, which has a similar-sized student population (but a higher share of international students). While Canada has fewer top-ranking universities than Australia, Canada offers extremely generous post-study work visas, and is an open and multicultural society. It is a major tech market (notably Toronto) and at a lower cost than the US, making it attractive to international employers.
Read the articles within Report: Global Living below.