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BRICS and mortar: real estate and international education

Student digs, it seems, have come on a long way. Certainly that’s the case for wealthy and internationally mobile students, many of whom hail from China and are enjoying rising purchasing power.

“Many super-rich Chinese can buy a property outright and often before the student arrives"

Peter Koulizos, a property lecturer and author at The University of South Australia, notes that most of the students in his classes are international students from Asia.

“Students from China are by far the largest cohort and some of the students – mainly from wealthier families – have said to me that their parents are keen to invest in Australia for a number of reasons,” he says, noting in particular the fact that the Chinese government has discouraged the purchase of multiple properties in order to avoid a national property bubble.

Destinations such as Australia, Canada, the US and the UK can be perceived as a safe haven for investment

“They have done this by requiring relatively large deposits on second and subsequent property purchases. This has forced property investors to look for property overseas,” he explains.

What’s more, destinations such as Australia, Canada, the US and the UK can be perceived as a safe haven for investment – with some areas having also seen dramatic price reductions since the financial crisis first took hold.

Koulizos picks Australia and Canada as two areas in which he is seeing major interest in terms of investment in real estate, alongside inflows of international students. “It is these two countries which have some of the best performing economies in the world,” he says, pointing out, too, that they are attractive to families seeking an English-speaking qualification for their children.

“Sydney, Melbourne and Adelaide are particularly attractive to international students due to the reputation of Sydney University, Melbourne University and the safety and affordability of Adelaide,” he adds.

His advice to those working in international education is to think about the property investment potential of their country as a potential drawcard. And the reason why? “If a service was available to the parents of international students who wished to purchase investment property, it could provide a marketing edge to those universities who offered this service,” he notes.

The trend for wealthy families to buy property for use during study periods and beyond is nothing new, but it is becoming more noticeable.

Ming Chou, programme director from JM International Education Cooperation in Taiwan notes that when she studied in both Singapore and the US “more than half” of her classmates had purchased property.

Yet it seems the increasing globalisation of the student community and the redistribution of wealth around the globe is making certain trends far more pronounced.

James Herbertson, sales manager at The Stay Club, who describes himself as an “education industry entrepreneur”, points out, too, that students have been moving away from home-stay accommodation for some time. He also stresses that accommodation is a critical factor when it comes to whether or not a student is going to rate his or her experience highly.

“It’s totally integral,” he says, noting that investors are piling in to the sector and claiming that the private, studio accommodation his organization offers is “flying off the shelves”.

Justin Richardson, director at Jardson in Beijing, a company which specialises in student recruitment and marketing services for international education providers, says it is “definitely” the case that students and/or their families are considering potential real estate investment returns when it comes to making a decisions as to where to study internationally: “This is definitely happening,” he says.

“Two years ago Jardson signed a deal with an Australian real estate company in Melbourne to upsell Australian property to Chinese students. I wanted to utilize the education agent network and their alumni to provide sales presentations. The co-operation never got off the ground, but it is definitely an area that I keep thinking of getting involved in.”

“Property interest exists wherever Chinese students are choosing as a destination”

“Property interest exists wherever Chinese students are choosing as a destination,” Richardson continues. “Many super-rich Chinese can buy a property outright and often before the student arrives.”

Yet laws around visas and immigration factor in the decision as to study location, too, of course, and Richardson points to Chinese investment into Australia as one example of this.

“My gut feeling is that property purchase percentage increases closer to the end of the study period, especially those students who know or feel they will be eligible to immigrate as a skilled migrant under the Australia skilled migration visa class,” he says.

And, like Koulizos, he believes that there is a largely untapped opportunity for education agents or providers to co-ordinate with sellers of real estate. He believes that we will see this “more and more” as the education agents get more consolidated and sophisticated.

Thus far, attempts to leverage marketing synergies have, in his view, fallen far short of their potential.

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