Spurred by growing demand, Mizuho has said it will put forward 15% of the equity for the fund, which, along with an additional ¥10bn in debt, it will use to construct university dormitories.

The remainder of the equity will come from both domestic and international private investors, including trading company Marubeni Corp and real estate firm Tokyo Tatemono Co.

“Almost all universities are telling us they don’t have enough accommodation for international students”

The bank has approached 50 universities about providing accommodation for their international students in the last five months, and has “specific discussions” underway with around 10, according to Shu Takata, deputy general manager of Mizuho’s real estate finance department.

The bank aims to invest in three projects by the end of March 2018, rising to 10 over the following two years. The developments could include entirely new properties or renovations of existing ones, and each is expected to house around 300 students.

“Almost all universities are telling us they don’t have enough accommodation for international students,” Takata told Bloomberg.

The number of international students in Japan hit 239,287 last year and is continuing to grow, driven by government-backed initiatives such as the Top Global Universities project, as the country strives to reach its target of hosting 300,000 international students by 2020.

But in May 2016, less than a quarter of international students enrolled in Japanese higher education – 22.9% – lived in student residences provided by their universities or the public sector, according to figures from the Japan Student Services Organisation.

A shortage of accommodation is “one of the major obstacles to the increase of international students in Japan”, according to Hiroshi Ota, director of the Global Education program at Hitotsubashi University in Tokyo and an advisor on international students for Hiroshima prefecture.

Though the majority of international students rent private apartments, as the number continues to rise, renting in the private housing sector is “not a realistic solution for this problem”, Ota told The PIE News.

“Renting in the private housing sector is not a realistic solution for this problem”

It is not illegal in Japan for landlords to reject foreign tenants, and a Ministry of Justice survey carried out earlier this year showed that of more than 2,000 foreign residents who had looked for housing in the last five years, 40% had at some point been refused because they were non-Japanese.

Insufficient purpose-built student accommodation, combined with barriers to the private rental market, have therefore created a gap in the market for new providers.

This includes premium pricing options, and student tenants in Mizuho’s developments are expected to pay between ¥30,000 and ¥80,000 ($275-$735) per month in rent, Takata said. The average rent paid by international students was around ¥31,000 in 2016, according to the JASSO statistics.

The properties will be managed by an external company, which may provide additional facilities for international students. When it first announced its intention to invest in the fund in March, Mizuho said it aimed to also provide services such as assistance with immigration and aeroplane tickets.

Once construction is completed, the fund will lease its properties to universities for around five years, before selling on its holdings as real estate investment trusts, the group said.