The property arm of German insurer Allianz has partnered with Scape Australia to establish an AUD500m (€315m) closed-end fund to provide student accommodation in Australia.
Allianz Real Estate will invest AUD250m in equity for a 50% stake in Scape Australia JV 2 Fund.
Three more investors, including global pension and sovereign wealth funds, are due to finalise documentation by next week to take up most of the remaining 50%.
Rushabh Desai, Asia-Pacific CEO of Allianz Real Estate, told IPE Real Assets that Australia is the third-largest market for international students after the US and the UK.
“Education has become the third-largest export sub-sector for Australia,” he said, adding that the industry is well-supported by the Australian government, through its policy on student visas.
Desai said Australia is attractive because of the low penetration of purpose-built student accommodation.
“Compared to the UK or US, which have a penetration rate of 30%-50%, Australia has a penetration rate of less than 10%.”
The venture will invest mostly in Sydney and Melbourne, but will also go into the Brisbane, Perth Canberra and Adelaide markets.
Australia will be the fourth purpose-built student accommodation (PBSA) market for Allianz Real Estate, which currently owns a €350m portfolio across the UK, Germany/Austria and the US.
Olivier Teran, Allianz Real Estate CIO, said: “This transaction is particularly exciting as it marks our first investment in student housing in the region. It complements our fast-growing global allocation to this dynamic sector.”
Teran said Allianz Real Estate is targeting allocation of between 5% and 10% of its global AUM - currently sitting at more than EUR56bn - within Asia-Pacific.
Craig Carracher, Scape Australia’s co-founder and managing director, told IPE Real Assets that the joint venture is expected to make its first transactions in Sydney and Melbourne soon after the fund closes.
Although the fund is capped at AUD500m, Carracher did not rule out that its investors could later increase their commitments.
He said the Scape Australia JV Fund 1 started with AUD220m and ended up with AUD630m.
“We have deployed close to AUD600m in 11 development projects and will soon be fully invested,” he said.
Carracher said the four principals of Scape Australia have around 20% of the first joint venture.
The principals, including Caracher, co-founder Stephen Gaitanos, Nigel Taee and Tom Ward, will have no less than 5% in the second fund.