Student accommodation developer Scape Australia has won further financial backing, this time from European and Middle Eastern investors, which sees the student accommodation provider round out a new $500 million fund.
The latest capital raise means the student accommodation heavyweight’s platform has grown to more than $1 billion in equity commitments.
This follows a $250 million investment from Allianz Real Estate last month to develop new purpose-built student accommodation (PBSA) across Australia’s major capital cities.
Growth in the capital city student accommodation sector seems unlikely to slow down as large institutional investors attracted by solid potential returns are seeing dollar signs.
Australia is the third-largest market for international students, behind USA and Britain, generating great investor interest to the PBSA sector.
Scape’s newest investors are a Luxembourg fund owned by a German institution, and a Middle Eastern sovereign wealth fund.
The $1 billion commitment gives Scape the ability to drive a project pipeline with a gross development value of more than $3 billion.
Scape Chief financial officer Tim Peel, speaking at the Property Funds Association conference this month said purpose-built student accommodation has become a mainstream investment type supported by big institutional investors.
“They’ve realised Australia is the next stop for institutionalisation of the sector and over the last couple of years we’ve seen a number of new entrants come into the market,” Peel said.
While there’s a lot of development happening in the sector, Peel continued, it’s against a backdrop of very short supply relative to student numbers.
Scape currently has three facilities operational in Sydney, Melbourne and Brisbane for more than 1,600 students.
Earlier this year Singapore-listed developer Wee Hur appointed Intergen Property Group to manage their $700 million PBSA fund to develop more than 3000 beds across Melbourne, Adelaide and Brisbane.