APG, Bouwinvest provide AUD150m to build Australian student housing

Bouwinvest has joined fellow Dutch pension investment manager APG in its ongoing programme to build student housing in Australia and New Zealand.

Bouwinvest, whose biggest client is the BPF Bouw pension fund, has committed AUD75m (€51m) to a consortium led by Scape Australia.

APG, the Netherlands’ largest pension investor, has upped its investment in Scape Australia for the third time, matching Bouwinvest’s AUD75m.

Bouwinvest’s managing director, international investment, Stephen Tross, told IPE Real Estate last month that it was close to finalising a deal.

Tross said then that he saw an opportunity in the student housing sector in Australia, given rapid growth in international student enrolments.

Bouwinvest joins a consortium that includes APG and the real estate arm of the Chinese financial institution ICBCI, which last November committed AUD110m to Scape Australia.

Craig Carracher, executive director of Scape Australia, told IPE Real Estate that, with the latest investment, APG has committed AUD230m to the Scape vehicle.

He said APG has been most supportive, and has been continuing to inject capital to retain its equity holding, as new capital partners have come into the fund.

APG first invested with Scape Australia in January last year. It now holds a 50% stake.

Carracher said the vehicle has raised AUD460m in capital, and it would remain open while discussions continue with an Asian pension fund looking to invest around AUD100m.

He said demand from foreign pension funds and private equity groups for a foothold in Australia’s emerging student housing market is growing.

“In the past two months, at least 10 groups have approached us wanting to know more about opportunity in this sector,” he said. “Of these, perhaps half are ready to commit if an opportunity becomes available today.”

Carracher first went into the sector five years ago, building what is known as The Pad Student Living in Brisbane, which it sold to Goldman Sachs and its joint venture partner, Blue Sky, in March this year.

He said that between 550,000 and 600,000 foreign students enrol in Australian universities each year, and that there are currently some 50,000 purpose-built student beds.

“Australia is 20 years behind London and for the next decade there will be a shortfall in supply of student accommodation,” he said.

Emphasising that Australian universities are located in the heart of cities, where sites are both expensive and difficult to secure, he added: “We are building off-campus accommodation within a radius of 100 metres from the campuses.”  

Carracher said Scape Australia has acquired eight sites in Sydney, Brisbane and Melbourne, for 4,000 student studios.

“We have enough capital with our existing partners to build accommodation for another 1,500 students,” he said. Scape Australia also plans to develop New Zealand, where it is scouting for sites.