RCA Insights

Surveying Student Housing Investment as Covid Clouds Demand

By on September 25th, 2020

Over the past six years there has been an explosion of institutional investment into student accommodation around the world on the premise that demand for housing is robust. That premise has been thrown into doubt as Covid-19 forces universities to reduce or cancel in-person teaching and thwarts travel by international college students.

Investment in student housing took off in 2015 and since then investors have spent on average $16.7 billion per year on direct acquisitions. In 2020, nearly $10 billion was spent in the first six months of the year alone, with close to a half of the total related to one mammoth U.K. deal.

Reflecting investor demand for this asset type, cap rates have fallen in recent years, down to an average of 5.1% in the first half of 2020, from 6.2% in 2015.

two charts comparing cap rate and deal volume, as well as top buyers

The list of top buyers of student housing assets includes some of the world’s best-known institutions as well as specialist operators. At the top of the pile is Blackstone, which purchased iQ Student Accommodation from the Wellcome Trust and Goldman Sachs. This deal, which is the biggest student housing transaction globally to date, was agreed in February 2020 and closed in May after regulatory approval.

In Australia, Scape Student Living, AXA Group, APG Group and Allianz partnered in an AU$2.1 billion ($1.4 billion) deal to buy the Urbanest student dormitories in the second quarter of 2020. The transaction was the second largest of any property type in the Asia Pacific region during the first half of this year.

As for the pipeline of deals, two transactions  both rumored to be priced in the hundreds of millions of dollars  are on the table. Germany’s Allianz is continuing its push into the Asia Pacific region with the purchase of a two-property portfolio in Melbourne, Australia, and in the U.S.,  TPG is buying an eight-property portfolio from Preferred Apartment Communities.

The wider rental accommodation sector, including apartment buildings, has been one of the more resilient sectors in year-to-date 2020. Student housing represented a 10% share of the overall sector, the highest level Real Capital Analytics has recorded since 2007. The long-term structural trends of rental accommodation will likely remain favorable, even if in the short-term there may be some headwinds for getting students back to school.


Beatrice Ginieis provided additional data analysis for this article.

Real Capital Analytics clients can use the Transactions module of the RCA website to search different geographies for the top owners, developers and lenders in the student housing sector. 

For RCA Insights articles concerning student housing, go to RCA Insights/Student housing

Also on RCA Insights

Low Interest Rates Not Enough to Kindle CRE Sales Activity

Cross-Border Investors Continue Spending in Australia

Simon Mallinson

Executive Managing Director, EMEA & APAC

Simon Mallinson joined Real Capital Analytics in January 2013. Based in London, Simon has board level responsibility for EMEA and APAC, with a particular passion for the continued development of RCA’s industry-leading client service and capital markets analytics.

Previously, Simon was Senior Director leading European Research at Invesco Real Estate. Prior to Invesco, Simon held a number of roles with IPD (now part of MSCI) in London and the United States. As Head of US Services, based in Chicago, he established IPD’s first North American office.

Simon is a Board Member of US association NCREIF, a member of RICS and is active across a number of other global real estate associations. He holds degrees from both Leeds and Manchester University, UK. Simon has set foot in 48 U.S. states and is looking for an excuse to visit Maine and Alaska.