Allianz Real Estate has made its first investment in Asia-Pacific’s student accommodation sector by committing capital to Scape Australia’s closed-ended fund that will target the development of student housing assets in the country.
The German insurer has committed A$250 million ($191 million; €156 million) in equity for a 50 percent stake in Scape Australia JV 2. The student accommodation developer and operator Scape is targeting to raise A$500 million in total for the club-style vehicle. PERE understands that the firm is currently in discussions with three to four other investors that will invest alongside Scape and Allianz in Scape Australia JV 2.
For Allianz, the push into student housing in Asia-Pacific is an expansion of its global strategy of investing in the niche asset class. Excluding the latest deal, the insurer has so far invested around €350 million across three student housing transactions. Rushabh Desai, chief executive for Asia-Pacific at Allianz Real Estate, told PERE that the firm hopes to add between €1 billion and €2 billion in terms of investment exposure to this sector globally over the next three to four years.
Speaking on the Australia transaction, Desai added: “Education has become the third largest export sub-sector for Australia and the purpose-built student accommodation market is markedly underpenetrated relative to the UK and US.”
Given the developmental play, Desai said the yield on cost for the deals made via the vehicle will be around 7 percent to 9 percent, depending on the location. In comparison, stabilized assets are currently trading at around 5 percent to 6 percent, he noted.
For Scape, the new vehicle is a follow on to the Scape Australia JV 1 fund. Stephen Gaitanos, co-founder of Scape and managing director of Scape Australia, said that the firm has deployed around A$600 million from the first vehicle across 11 developments over the last three years.