All major higher education markets experienced a surge in student numbers during the global economic downturn. As jobs became scarce the recessionary trend to up-skill took hold.

Universities also sought more fee-paying foreign students to offset costs. Between 2007/08 and 2013/14 student enrolment increased by an average 15.1% across the top seven higher education markets. But improving economic conditions and rising tuition fees in some countries have since seen enrolment numbers plateau or fall in some markets (Figure 5 below).

^{Source: HESA, Destatis, INSEE, Ministerio de Educación, Rijksoverheid.nl, National Center for Education Statistics, Department of Education and Training, Savills World Research}

The UK, US and the Netherlands saw a dip in student enrolment in the 2012/13 academic year, but have returned to growth. Australia, Germany, and to a lesser extent, France, continued on an upward trajectory throughout the period.

Germany and France have negligible tuition fees, so the cost burden is less of a driver in these markets (for domestic and EU students at public institutions at least), while Australia has been supported by sustained population growth and a rapidly increasing foreign student population (up 10.1% in the year to March 2015 alone).

It is this growth in higher education enrolment globally that has underpinned demand for student accommodation, which in many cases has significantly outpaced supply.

Global employment

A footloose global workforce means many job markets are pulling from a worldwide pool of talent. Figure 6 shows employment forecasts for some of the world’s most important student cities. Some Asian and Middle East markets are forecast to see the fastest rates of growth over the next ten years while other Asian cities are registering the slowest.

Dubai, Beijing, Mumbai and Singapore are all expected to add in excess of 15% more jobs over the next decade. Conversely, Tokyo, Seoul and Hong Kong, all major source markets for international students, are expected to see their job markets grow extremely slowly or, in the case of Hong Kong, contract. Slowing job markets in these locations are likely to push more people to education overseas in order to up-skill and become more competitive.

Of the European cities, Dublin is set to see strong growth in employment over the next ten years (12.4%), although its overall job market is small by global standards. Dublin’s economy is set to be driven by expansion of the tech sector, a field in which it is already a global player. London and New York are two large employment markets with strong growth forecast (10.8% and 9.6% respectively), further reinforcing the appeal of these cities as destinations for students and graduates.

^{Source: Oxford Economics}

Post study visas

All the major higher education destination countries offer routes to employment for foreign graduates. This has a major impact in attracting students from overseas. Graduate visas range from one to five years and typically require a degree and employer sponsorship. Sponsorship is often difficult to obtain, particularly when competing against domestic students who do not have the same requirements.

Highly skilled graduates or those with specialist qualifications have more routes to employment in a foreign country, however, particularly if these skills appear on ‘shortage occupation’ lists.

Germany and the Netherlands also offer graduate search permits or jobseeker visas, of six months and a year respectively, in which to find work. Any changes to this type of visa arrangement have the potential to significantly affect student demand.

^{Source: Eurostat, ABS, ONS, BLS}

The type of degrees offered in a city are also an important factor in determining demand for courses. So-called STEM degrees (science, technology, engineering and mathematics) tend to result in higher salaries so are more likely to attract students willing to invest in all aspects of their education, including accommodation.

As the technology sector outgrows finance (notably investment banking) in the job markets of many countries, demand for skilled graduates in this field will increase. Not only do universities supply skilled employees for the sector, but they also provide the research base for the advancement of ideas and technology.

^{Source: Emolument}

This has led to a wave of specialist ‘Tech Cities’, from established world cities like London, to smaller centres such as Berlin, Austin and Tel Aviv, with education at their heart. It potentially opens up new opportunities for both undergraduate and postgraduate accommodation and lettings.

On this basis, those developing or investing in student accommodation would do well to consider the fields in which the anchor institutions specialise. High-ranking institutions focusing on STEM subjects, embedded in local industry, would appear to better reflect a changing global jobs market and in turn potential future demand from students.

Comparing the cost of living and study

From a cost perspective, European study destinations have a clear appeal to students when compared to the US, UK and Australia. We have compared the cost of living, accommodation and tuition across 22 global university cities for an international student studying for a science degree and residing in quality purpose-built student accommodation (Figure 9).

With the US charging the highest tuition fees globally, Boston, New York and San Francisco are the most expensive cities. Total annual student costs are over $60,000, of which tuition accounts for two-thirds. Sydney and London follow around the $48,000 mark; high accommodation costs are offset by marginally lower tuition fees.

At the other end of the spectrum, German cities, where tuition costs comprise only a series of registration and semester fees, are exceptionally affordable by international standards, especially when combined with the relatively low cost of living and accommodation. With combined annual costs of just over $12,000, Berlin is even cheaper than Shanghai by our measure. This reflects high German university enrolment growth.

^{*International student on a non-specialist undergraduate science degree, staying in purpose-built student accommodation.
Exchange rates EUR/USD 1.12, GBP/USD 1.56}
Source: Savills World Research 

Student flows

According to the OECD, over 4.5 million students studied abroad in 2012, up from 2 million in 2000. This figure is forecast to reach 8 million by 2025. Five countries accounted for 47% of these students: the US, UK, France, Australia, and Germany. While these markets dominate, a key trend has been the emergence of regional hubs attracting mobile students. The UAE, for example, is now the top destination for students from the Middle East, having overtaken the UK for demand from mobile students originating in this region.

The top five source markets globally are China, India, the Republic of Korea, Germany and Saudi Arabia. In 2012 there were 694,000 students from China studying abroad, more than three times the number of the next largest group, India, at 190,000. Four of the top six individual student flows are from China (Figure 10).

^{Source: OECD}

The US remains the number one destination for international students, host to 886,000, of whom a quarter are from China. The popularity of the US higher education sector among international students has been fundamental to the expansion of the student accommodation sector in the country. In terms of both size and quantity, the US has by far the most high-ranking institutions, making up 56% of The Times top 50 universities, and 36% of the QS top 50 (Figure 11). This comes in spite of exceptionally high tuition fees, and reinforces the notion that cost has limited bearing on the existing international market.

^{Source: The Times Higher Education World University Rankings, QS World University Rankings}

The UK is the next largest international destination market, with 388,000 foreign students. Germany and France are not far behind, at 301,000 and 295,000. The largest foreign student groups in France originate from Germany, and in France the largest group is from Morocco.

When it comes to potential, the Australian market is the fastest growing, having seen 10.1% growth in the number of foreign students in the year to March 2015. The Netherlands was the first non-English-speaking market to introduce a large number of programmes taught in English, and is now host to 1,009 of these courses.

The rest of Europe is catching up, however. Germany now offers 857 masters programmes in English, and it is no coincidence that both the Netherlands and Germany have seen rapid growth in their foreign student population. Elsewhere, France has gone from 11 to 570 English taught masters between 2007 and today, Spain from 8 to 474, and Italy from 8 to 418 over the same period.

UK students can now apply for European universities directly via the UCAS system. Dutch institutions have been the first to take advantage of this.

The allure of English speaking markets

Even though tuition and living costs in mainland Europe are a fraction of that of the US, UK and Australia, these high-cost countries continue to remain popular with students from home and abroad. Their appeal is due to a number of factors, the foremost of which is that they are English speaking. The international language of business and the most commonly spoken second language worldwide, tuition in English carries significant weight and is of importance to prospective employers in any major market. It is not surprising therefore that the USA, UK and Australia boast the most high-ranking institutions worldwide.

The rationale for study abroad also comes down to how a country’s qualifications will be recognised at home. The reason that UK, US and Australian degrees have been so popular for non-nationals is that they offer a bachelor system. Much of Europe had historically been at a disadvantage in this respect. But the Bologna Reform agreement means that participating European nations will all move to the bachelor system by 2020. This also has the effect of shortening course length in European countries, putting these students into the workforce sooner.