Institutions are also drawn by student housing's higher cap rates compared to multifamily, along with “the potential to provide diversification within the apartment sector and operational synergies with conventional apartment portfolios,” according to TH.

Another report issued this month, from FourPoint Student Housing Investments, notes that five large portfolio deals accounted for about $4.6 billion of volume last year, or more than triple the previous record for portfolio investments established in 2012. It also highlights another aspect in which the CCPIB/GIC/Scion JV illustrates current student housing investment trends—the influx of foreign capital. Between them, CPPIB and Singapore-based GIC will hold a 90% interest in the portfolio on which they partnered this month, with Chicago-based Scion taking a minority interest.

The influx of cross-border investors into US student housing last year represented “a dramatic shift” in the buyer profile, according to FourPoint's report. “Previous years saw negligible investment activity from overseas, however, 2016 was witness to foreign capital dominating 25% of the total sales volume for the year.”

It's important to note that large portfolio transactions—including the $1.3-billion deal with which CPPIB, GIC and Scion launched their JV—represented almost all of that 25% share. “Regardless, overseas buyers clearly view the US, and student housing in particular, as a haven for their capital relative to their home economies,” the FourPoint report states.

FourPoint's year-end report puts the '16 tally for student housing investment sales even farther ahead of the '15 sum. Chris Epp, principal of FourPoint, counts himself “shocked” to see the final numbers clock in at $10.35 billion. “While 2016 will be a tough year to top in terms of sheer investment volume, I get the sense that we are at the very tip of the iceberg in terms of new players entering the space,” he says.

The firm's co-founder, principal Chris Bancroft, points out that along with overall transaction volume, last year also broke records for all pricing metrics, “including price per bed, price per unit and price per square foot. Development activity shows no signs of slowing down and this is fueled by new entrants to the space along with an extremely low cost of capital for both debt and equity.”

NEW YORK CITY—Less sensitive to the ebb and flow of the economic cycle than conventional apartments, student housing is also a considerably smaller investment class. Citing data from Real Capital Analytics, TH Real estate estimates that 2016 saw $9 billion of student housing transactions, compared to about $140 billion worth of trades in the multifamily sector. Yet the 12-month tally for apartments represents a decline of nearly 7% from 2015, while student housing volume grew by about 50% year over year from the previous high water mark for the sector.

Observes Tom Park, senior director, strategy & research at TH Real Estate, says that rental growth in student housing has proven to be “less volatile than that of conventional apartments, partially as a result of the sector being less economically sensitive. Results for some of the largest players in the market show rental growth volatility, as indicated by the standard deviation, was lower than conventional apartments and capital expenditures are in line with those of conventional apartments.”

The blockbuster $1.6-billion portfolio deal announced earlier this month by the Canada Pension Plan Investment Board, GIC and the Scion Group—the joint venture's second 10-figure transaction since its formation in January '16—did not occur in a vacuum. “The US student housing sector is an attractive investment opportunity, driven by secular strength in enrollment growth and favorable supply dynamics,” says Hilary Spann, managing director and head of US real estate investments for CPPIB, adding that achieving scale in the sector is “an important global investment objective” for CPPIB.

Or, as TH puts it in a new white paper, “Institutional interest and investment in the student housing sector is growing as a result of favorable demographic trends, stable and recessionary-resistant demand, limited on-campus housing, highly-fragmented industry ownership and the growing obsolescence of on-campus housing stock; factors which are expected to bolster the sector in the future.” As an illustration of the sector's fragmented ownership, the TH white paper notes that the 25 top student housing owners combined own just 8% of the beds in the 175 leading colleges and universities tracked by Axiometrics.

Institutions are also drawn by student housing's higher cap rates compared to multifamily, along with “the potential to provide diversification within the apartment sector and operational synergies with conventional apartment portfolios,” according to TH.

Another report issued this month, from FourPoint Student Housing Investments, notes that five large portfolio deals accounted for about $4.6 billion of volume last year, or more than triple the previous record for portfolio investments established in 2012. It also highlights another aspect in which the CCPIB/GIC/Scion JV illustrates current student housing investment trends—the influx of foreign capital. Between them, CPPIB and Singapore-based GIC will hold a 90% interest in the portfolio on which they partnered this month, with Chicago-based Scion taking a minority interest.

The influx of cross-border investors into US student housing last year represented “a dramatic shift” in the buyer profile, according to FourPoint's report. “Previous years saw negligible investment activity from overseas, however, 2016 was witness to foreign capital dominating 25% of the total sales volume for the year.”

It's important to note that large portfolio transactions—including the $1.3-billion deal with which CPPIB, GIC and Scion launched their JV—represented almost all of that 25% share. “Regardless, overseas buyers clearly view the US, and student housing in particular, as a haven for their capital relative to their home economies,” the FourPoint report states.

FourPoint's year-end report puts the '16 tally for student housing investment sales even farther ahead of the '15 sum. Chris Epp, principal of FourPoint, counts himself “shocked” to see the final numbers clock in at $10.35 billion. “While 2016 will be a tough year to top in terms of sheer investment volume, I get the sense that we are at the very tip of the iceberg in terms of new players entering the space,” he says.

The firm's co-founder, principal Chris Bancroft, points out that along with overall transaction volume, last year also broke records for all pricing metrics, “including price per bed, price per unit and price per square foot. Development activity shows no signs of slowing down and this is fueled by new entrants to the space along with an extremely low cost of capital for both debt and equity.”