Asia will account for more than half of the global economy by 2040. However, while money and wealth flows into Asia, the population is aging at an alarming rate. In Japan, for example, seniors will account for 20% of the entire population by 2030. Thailand’s seniors will account for 25% of the population by 2040. This has led to high demand of senior living facilities and the emergence of more healthcare REITs in Japan. In fact, according to Property Investor Today, there is great demand for retirement properties with 800,000 beds needed by 2030. Thailand faces another problem in addition to its own aging population: the foreign retiree. Applications for retirement visas doubled from 2013 to 2017, adding more demand to retirement development.
These factors are offering up numerous opportunities for developers to tap into the $123 billion market in Japan and the enormously growing Thai market. Despite this demand, it has been increasingly difficult for foreign investors to enter the markets against some of the stronger and more established Asia Pacific (APAC) developers. However, with more expats continuing to retire abroad, there may become more demand for western developments.
Cross-border capital into student property markets around the world accounted for 40% of investment into student accommodation over the last three years and that number is expected to rise according to the Global Student Property 2019 by Knight Frank. This sector is desirable around the world, but especially so in the European markets. There are currently over 15 million students studying at 3,300 institutions across continental Europe, which represents a 7.7% increase over the past 3 years. Another key factor in growth has been the rise of international students studying in Europe, which currently stands at 2 million students annually.
With the demand in student housing on the rise, many North American companies, including Nuveen, Brookfield and Lasalle Management, have invested large sums into student housing in Europe. One common motive for student accommodation investment is its perceived countercyclical qualities. During a depression or downturn, the consumption of education increases. Provision rates, which measure specialist student accommodations compared to the overall student populations, also remain very low.
Given the expected increase of international students over the next decade, the demand for student housing is set to significantly increase in the coming years.