In the past couple of decades a growing, internationally mobile student population has fuelled demand for purpose-built student housing (PBSH) in markets such as the UK and US. But demographic change is set to see new student populations emerge from locations which haven’t previously been considered, leading to a new set of challenges for institutions and developers alike.
Since the late Nineties, China has been by far the world’s largest source market for outbound students, and in volume terms it is set to continue to be so for the foreseeable future. However, between 2016 and 2026 the number of Chinese 15 to 24-year-olds is set to fall by 12 per cent. A similar downshift in student-age populations is also set to be seen in Germany (down 9 per cent) and South Korea (down 30 per cent), leaving just India and France in the current top five outbound markets set to see increases in this age bracket, with 2 and 5 per cent increases respectively.
Where these students have been choosing to study is diversifying: the previously dominant education sectors in the US and UK, while remaining the most popular destinations in terms of overall net volumes, are currently facing stagnating student numbers, while smaller markets continue to see strong growth.
Austria and Ireland, for example, have experienced a strong run of growth in the past seven years, seeing student numbers rise 44 per cent and 42 per cent respectively. Austria has been buoyed by low tuition fees and the rising appeal of European destinations, while Ireland has benefited from favourable demographics. In the southern hemisphere, Australia has seen student numbers surge, benefiting from strong inbound Asian demand and a fast-growing domestic population.
The next decade could, however, see this trend stabilise: demographic forecasts suggest that Nigerian and Saudi Arabian students will grow substantially in importance in the global marketplace as 15-24 year-olds in these countries increase by an enormous 35 per cent and 20 per cent respectively. If these students of the future continue to follow in the steps of their older counterparts, who overwhelmingly favour the UK (the top destination for Nigerian students) or US (top for Saudi Arabian students), demand for places and accommodation in these markets will be sustained even as student numbers in Europe and Australia continue to increase.
The student housing developer or investor looking to the long term may do well to watch for countries and cities that benefit from a diverse international demand base to ensure they are not susceptible to fluctuations in numbers from a particularly outbound source market.
Top outbound markets and forecast demographic change:
Read more: Savills World Student Housing Report