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.
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.
He claims that some property developers are “going about their business the wrong way”, for instance with “aggressive” cold calling: “I feel they would be better developing relationships directly with education agents, which is what I wanted to do and may consider doing again in the future,” he says.
Alexandra Borges de Sousa, director at language school CIAL’s Portuguese Department in Lisbon says that she has noticed – as recently as the second half of 2013 – an increase in requests of information.
“Property developers would be better developing relationships directly with education agents”
She says that some of these bookings are directly connected to ‘Golden Visas’, a scheme which Portugal initiated in 2012, whereby citizens of countries outside the European Economic Area (EEA) who purchase a property in Portugal worth at least €500,000 are entitled to apply for a Portuguese temporary residence permit known colloquially as a Golden Visa.
“What we noticed is an increase in bookings from students, namely Chinese, who are already here in one of those special visas and decide to learn the language,” she explains.
CIAL, she says, was approached by “a major national bank”; one which has an operation in France.
“This bank is launching a ‘package’ of advantages for French retired people who decide to buy property and come to live in Portugal. This is also in connection to a government program that will exempt these people from paying income tax in either country. The bank wants include learning Portuguese in this package, and CIAL will be their partner,” she says.
Yet, while she agrees that her suspicion is that the decision as to where to study can be impacted by the thought of potential returns from real estate, she believes that it is the “possibility of being granted a residency visa (simply) because one buys up-market real estate” which is the root cause of increased bookings in the country at present.
“But, to be totally candid, and talking only about Portugal and the Portuguese, most of us feel that the ‘Golden Visa’ business is an easy way for the government to attract foreign investment in real estate, that doesn’t really do much for the image of the country or of its educational institutions,” she adds.
International Property consultants’ views on the real estate market for the study abroad sector:
Thomas Lam, director and head of research and consultancy, Greater China at Knight Frank in Hong Kong pinpoints London, Boston, San Francisco, Los Angeles, New York and Chicago (“places where well-established high schools and universities are”) as locations where Chinese families in particular have an interest in buying property.
He notes that the purchase of real estate is generally viewed as a long-term investment, with the possibility of obtaining foreign citizenship an important factor too.
However, he points out, also, that the potential for real estate returns is unlikely to be the deciding factor when it comes to where to study. “The reputation of a city’s education system would be a more important factor,” he says.
“We often see parents buying property either for their children to live in while at university or for them to use when they visit”
David Green-Morgan, global capital markets research director at Jones Lang LaSalle in Singapore agrees, saying: “I’m not sure that we see people making decisions on universities based on where they can get the best property returns but we often see parents buying property either for their children to live in while at university or for them to use when they visit.”
That said, supply and demand and strong yields are making student accommodation an attractive real estate investment option in many parts of the world, with research from Jones Lang LaSalle noting that the market is unlikely to slow any time soon, with a continuing rise in student numbers worldwide – which is expected to reach over 263 million by 2025. Over half these students have come from Asia, it says.
As such, Yolande Barnes, director of world research at global estate agents Savills, warns that leading universities need to ensure they offer high quality accommodation “in order to continue as destinations of choice for the rapidly growing pool of academically ambitious, global students.”
• This article was originally published in The PIE Review.
