EUROPE – Bouwfonds REIM is targeting German investors with a pan-European student housing investment strategy.

Dutch asset manager, part of the Rabo Real Estate Group, plans to launch a €200-300m regulated institutional fund (Spezialfonds) that will invest in Germany, France, UK, Netherlands and Scandinavia.

Bouwfonds already owns and manages six student-housing complexes in Germany and France on behalf of the Bouwfonds European Residential Fund, which was created in 2007.

The fund manager now wants to create a dedicated student accommodation fund following positive experience in the sector.

It is aiming for an internal rate of return between 5.5% and 6.5% by investing in student accommodation "with a core risk profile" in European university towns and by using up to 40% leverage.

Fund manager Xavier Jongen said: "If we compare the direct deals with those of more conventional residential real estate in our portfolio, these student residencies are outperformers, despite their need for more intensive management."

Bouwfonds was prompted by its own positive experience of investing in the sector to carry out a study of the long-term profitability of the major European student housing markets.

The study predicts long-term stable demand for the sector in Europe, which it estimates to be currently €20bn in scale, driven in particular by growing numbers of foreign students from outside Europe.

Jaap Gills, CEO of Bouwfonds REIM, said: "Europe can benefit from the growing tendency among Asian students, for example, to study abroad due to the wide range of fairly affordable courses, an increase in the number of programmes taught in English, and the attractive cultural and historical cities of Europe."