Despite half-empty dormitories this year, institutional investors remain confident that student housing will remain an attractive long-term bet on the Asia-Pacific region's growing middle class.
While the market's backdrop has become considerably "noisy" of late, the 15.5 trillion won ($13.5 billion) Public Officials Benefit Association, Seoul, is moving to make its first investment in student housing by year-end or early next year, noted Dong Hun Jang, POBA's chief investment officer, in an Oct. 26 interview.
The global coronavirus pandemic and geopolitical tensions may have dented the "safe, stable" image of student accommodations but to the extent parents in China, South Korea and other Asia-Pacific countries remain "very dedicated" to their children's education, the investment thesis should pan out over the long term, Mr. Jang said.
He declined to say how much POBA would be investing in the sector.
Likewise, Korea's 750 trillion won National Pension Service, Jeonju, announced in October it had partnered with APG Group, a Dutch pension investor, to invest in a fund managed by Scape Australia, Australia's biggest student accommodation provider with about A$3.3 billion ($2.3 billion) in assets under management. APG oversees €536 billion ($627.8 billion) in retirement assets including the €463 billion Stichting Pensioenfonds ABP, Heerlen.
An NPS spokeswoman confirmed the investment but declined to give further details or comment on reports that NPS had invested A$300 million in the Scape Core Fund.
A number of institutional heavyweights, including GIC Pty. Ltd., a Singapore sovereign wealth fund with estimated assets of more than $400 billion, and Canada Pension Plan Investment Board, the C$434.4 billion ($329.2 billion) Toronto-based fund, have invested in student accommodations as a means of tapping into the relentless growth of the Asia-Pacific region's middle class.
Executives with those asset owners — whom analysts figure have invested more than a billion dollars each in student accommodation over the years — say the "out of left field" hit from the pandemic, while considerable, hasn't soured them on the sector.