Scape Australia has partnered with Allianz to form a new $500 million fund focused on developing new student accommodation in Australia’s major capital cities.
The property arm of the global insurer and asset manager, Allianz Real Estate, will take a fifty per cent share in the new fund.
Student accommodation provider Scape currently has three assets operating in Sydney, Melbourne and Brisbane with more than 1600 student accommodation bedrooms.
Proceeds of the new fund will be used to invest into purpose-built student accommodation developments in Sydney, Melbourne, Brisbane, Perth, Canberra and Adelaide. The new fund follows Scape's first effort, the Scape Australia JV 1 fund, which has invested $600 million across 11 developments across the past three years.
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Allianz Real Estate Asia-Pacific chief executive Rushabh Desai said Australia’s purpose-built student accommodation market is markedly underpenetrated relative to the UK and US markets.
“Education has become the third largest export sub-sector for Australia,” Desai said.
“The proportion of students staying in purpose-built student accommodation is likely to grow significantly [with] most of this demand expected to be concentrated in Australia’s tier one cities.”
Allianz Real Estate’s global AUM currently sits at over EUR56 billion. Chief information officer Olivier Teran says their target is to hold five per cent of this figure in the Asia-Pacific region.
“This transaction is particularly exciting as it marks our first investment in student housing in the region,” Teran said.
Australia’s growing student accommodation sector
Student accommodation has emerged as a growing opportunity in Australia, with international students in 2017 ranking Australia as the third most popular location to study abroad in the world.
While nearly 50,000 bed spaces are expected to be made available to students between 2015 and 2021, by the end of 2020, the national undersupply of bed spaces is projected to increase by 39 per cent.
“We are delighted to welcome Allianz Real Estate, their team and the Allianz brand as our major, long-term capital partner,” Scape managing director Stephen Gaitanos said.
“We have continued to develop our best in class student service, real estate development and investment management capability and are well positioned to take advantage of our strong global brand, local profile and best in class branded student service to our domestic and international students.”
