Dutch manager Bouwinvest to make Australian student-housing debut

Dutch real estate investment manager Bouwinvest is poised to enter the increasingly popular student accommodation market in Australia.

Speaking to IPE Real Estate at the Real Estate Investment World Asia 2016 conference in Singapore, Stephen Tross, managing director of international investments, said: “We are closing a deal in Australia [expected to be] at the end of the month.”

It will partner with an Australia company in a small club with other international investors.

Speaking on a panel on global economic uncertainty and investors’ outlook on Asia-Pacific real estate, Tross said Australia was attracting many international students, “and there is hardly any dedicated student housing”.

Tross said student housing and hotels were two niche markets Bouwinvest was focusing on as opportunities in the core space.

Tross said Bouwinvest would be able to tap into the rise in the Asian middle class and the growth of tourism, adding that the company had recently invested in a pan-Asian hotel fund.

Bouwinvest has invested in office, retail and logistics in Australia and Tokyo office in Japan.

“A lot of these investments were made around 2012 and 2013,” he said, “when it was possible to get exposure to this type of investment.

“We are very happy we did so because the Australian office and retail sectors have become difficult to access.

“Even when existing (wholesale) funds open for equity raising, you just cannot get in because equity raising is all taken up by the existing investor base.”

In addition to Australia and Japan, Bouwinvest has investments in Singapore and Hong Kong.

It has exposure to China’s business parks through REITs listed in Hong Kong to get around issues of governance and transparency.

“These markets offer higher GDP growth than Europe or the US,” he said.

“True, we might not believe all the growth numbers they produce in China. [But] if it is 4% and not 6%, it is still a lot more than the 0-1% we find in Europe. So we are looking to capture that GDP growth in Asia.

“Despite concerns about China’s slowdown, in our business plan for the next three years, we have increased our allocation to Asia to 25%.”

He said the allocation was lifted by 5 percentage points from 20%. 

He told IPE Real Estate this could involve an increase of “a couple of million of euro”.

“In the last six years, our Asian portfolio grew from 5% to 20% of the international portfolio,” he told the conference.

One reason for going to Asia is the range of investable products available.

Another is that Asia gives Bouwinvest an opportunity for diversification.

Tross said there was no correlation in the cycles between Asia and Europe or the US markets.

“So, from the perspective of timing, it is interesting to add [Asia] to our portfolio,” he said. 

“We are investing pension money, which means real estate is not a return-driven investment. For us, it is a strategy to hedge our pension liabilities.”

He said 60% of Bouwinvest’s portfolio was in core, 30% in value-add and 10% opportunistic.