University housing development is being driven by the growing global student population.

Student housing was one of the highest performing sectors during the global economic crisis, according to a recent study from international real estate adviser Savills, and is quickly becoming a major asset class on the global stage. Apartment

While generated from short tenancies, purpose-built student housing generates stable rental income flows that are protected by the depth and consistency of demand. Increasing demand from foreign students, combined with low levels of competing supply in many world-class university cities, is opening up new opportunities for luxury purpose-built housing investment.

Following the downturn, investment in the sector grew quickly, rising from $3.4 billion in 2007 to a record high of $7.2 billion in 2013, according to Savills. Though institutional investors have dominated cross-border investment to date, accounting for 57% of deals by amount, Savills expects private wealth to emerge where student housing is still a developing market.

Globally, there are approximately 164 million students enrolled in higher education, with another 32 million expected to enroll in the next ten years. Universities are increasingly relying on international students as a source of funding. Their numbers are expected to increase to 3.9 million in ten years, up from just 3 million in 2011.

A the global student market seeking high-quality, purpose-built student housing has driven growth and will continue to underpin demand in markets that have traditionally catered primarily to the domestic market. This will be especially true of institutions with increasing international reputations, particularly those that provide English as a medium of instruction.

"These international students have ever higher expectations of every aspect of life at their chosen universities, creating appealing opportunities for investors in purpose-built accommodation," says Yolande Barnes, director, Savills world study.

"The demand for quality products will grow as the number of foreign students grows, but we don't expect it to be solely due to students crossing borders. Capital is increasingly moving across borders in search of new investment opportunities."

With about 650,000 students studying abroad, China is the largest source market for globally mobile higher education students, nearly doubling between 2007 and 2011. With a continued emphasis on the United States, the United Kingdom, Germany, Japan, and Australia, and increasing interest in Europe, numbers are expected to continue to increase.

After China, India has the most students studying abroad (196,000), with a strong presence in the United States and the United Kingdom, followed by South Korean students (128,000), who prefer Japan and the United States. Brazil is expected to become yet another big student exporter.

"Increasing tuition fees around the world, technical advancements that make distance learning more feasible, and visa restrictions on foreign student movements are all threats to the sector," Barnes says.

"Most university towns, on the other hand, have major housing shortages that warrant significant investment. The demand for quality products will be secure as the number of foreign students grows."

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