However cities with smaller student populations can be a good option for student accommodation developers due to a current lack of housing, it added.
Investment in student accommodation has seen significant growth the last ten years, with markets in Europe and Australia booming, the research indicated.
Global student housing investment went from $0.9bn in 2009 to $17.4bn in 2018, marking a growth of 1833.3%, according to the report.
“Out of 19 alternative asset classes, student housing is number one in terms of volume and, so far, has attracted more than 700 investors globally,” CEO of Bonard Samuel Vetrak said at the EXPO REAL event in Munich.
“It is mature, transparent and sizeable, while still offering the benefits of an alternative real estate asset class,” he said.
The growth coincides with an increase in international students over the same time period. In the US, the UK, Western Europe, Central and Eastern Europe and Australia, the number of international students all increased.
The region that saw the highest increase was Central and Eastern Europe, where between 2008 and 2018 there was an increase of 92%.
Bonard identified seven “super-sized” cities with international student populations of 30,000 or more, including London, Paris, Melbourne, Sydney, Vienna, Madrid and Berlin.
The report also noted 19 big cities with 15,000 to 30,000 students and 60 mid-sized cities with 5,000 to 15,000 students.
“Super-sized and big cities are targeted by players interested in deploying significant capital and aiming to acquire ambitious housing volume. The majority of cities are mid-sized, though, and these are usually part of most strategies across the industry,” Vetrak said.
According to Bonard, opportunistic investors are more focused on returns than volume, which may mean investing in housing in Tier 2 cities by total population but Tier 1 by student population.
The report also highlighted cities where student to purpose built student accommodation (PBSA) ratios are lowest.
For every PBSA bed in Warsaw, Poland, there are 73 international students, while Tricity also in Poland has 58 students for each bed. Copenhagen has 55 students per PBSA bed.
This compares with the supply of students in “super-sized” cities such as Sydney, Melbourne and London, where there a six, five and two international students per PBSA bed, respectively.
For each PBSA bed in Paris and Vienna, there are 23 and 14 international students, respectively, the data showed.
The appetite for investment in student accommodation is showing no sign of slowing down. The report identified Europe and Australia as hotspots for future projects.
There are currently more than 450,000 private beds in the UK and the EU, worth €44bn.
According to Vetrak, there are 592 projects in the pipeline in the UK and Europe that are coming onto the market in the next 2.5 years, either under construction or which have been granted student housing permits. These projects represent 151,000 new private beds which is the equivalent of €17bn.