Back to school

On Monday we saw two announcements regarding European student housing; an opportunity fund advised by Tristan Capital Partners has invested £439m in a new UK student housing joint venture and AXA IM entering the student housing sector with the acquisition of all 37 Spanish student accommodation facilities owned by Spain's student accommodation provider Resa (guesstimated acquisition price between €400m and €500m). This coincided with Xior, the second European and first continental student housing REIT, having been added to the FTSE EPRA Indices.

All positive developments because the sector is still probably underrepresented (c0.95% EPRA Developed Europe) as student housing has developed into a stand-alone asset in its own right and is becoming significantly more "core" for large investors. In particular, the sector has seen record levels of investment over the last several years, major structural changes and consolidation within the more established markets. Higher education has increasingly become a global business. The number of international students in Europe is expected to exceed 7 million by 2020, compared to 4.1 million in 2014, representing an excellent opportunity for growth in Europe. The increases in student numbers in countries such as Germany and the Netherlands have been significantly stronger than those in the UK since the turn of the century, increasing by more than 35% respectively compared to 11% in the UK.

Investor focus has been mainly concentrated on the UK in recent years, but there are signs of increased liquidity in other key European markets; last week we read of Student Properties Spain Socimi's listing plans. But until Continental Europe develops further, in the listed markets the real liquidity is still to be found in the UK though with Unite's composite turnover at GBP 6.8m/day vs Xior at €200k/day over the past 12M.

This article was originally posted on LinkedIn. 

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Vincent Willink