"Freshmen Arrive Every Year": Solid Demand Drives Major Investors to Pour 1 Trillion Won into Student Dormitories

Ares invests $1.3 billion in the U.S.

Secures 10,000 student housing beds in America this year

New freshmen every year... More resilient demand than offices

Pension funds and insurers in developed countries drive rental housing invest

Global alternative investment capital is expanding its territory to include student dormitories where university students reside. Moving beyond traditional commercial real estate, such as office buildings and logistics centers, substantial funds are now flowing into 'Living' assets—student housing and rental accommodations—driven by real housing demand.

Ares Management, a global alternative asset manager, announced that on September 1, local time, it acquired four student housing properties near the University of Georgia, the University of Tennessee, and Texas State University in the United States, in partnership with The Scion Group, a U.S. student housing operator. The deal, worth approximately $435 million, encompasses properties with a capacity to accommodate 2,316 residents.

Just three months prior, an even larger transaction took place. The two companies formed a strategic partnership and purchased 12 U.S. student housing properties with a total of 7,578 beds for $910 million. In 2026 alone, their combined investments in the sector have reached $1.345 billion, securing 9,894 beds in total.

Freshmen Enter Every Year... More Reliable Demand Than Offices

The assets Ares has invested in are Purpose-Built Student Accommodation (PBSA)—housing built exclusively for students. Unlike dormitories run directly by universities, these residences are developed and leased by private operators near campuses. In the UK and Australia, such properties have already become leading 'Living' sector assets attracting investment from pension funds and insurance companies.

The investment logic for PBSA is relatively straightforward. As long as prestigious universities maintain their student populations, a new pool of tenants emerges each year. Moreover, land near campuses is limited, making it difficult to introduce new supply.

According to Cushman & Wakefield, in 2025, institutional capital is expected to account for as much as 35% of U.S. student housing investments. Properties located within half a mile of campus command average values that are 33% higher than those farther away.

Lease terms are generally based on the academic year, allowing for more frequent rent adjustments in line with market conditions, unlike the five-to-ten-year lease periods common for offices. However, individual universities may see variations, for example, due to declines in the number of international students. An investment banking industry source explained, "The ability to accurately forecast student enrollment and new housing supply is what determines the performance of these assets."

National Pension Service Also Invests in PBSAs... Considering Expansion into Rental Housing

The National Pension Service (NPS) contributed $300 million to a fund of Scape Australia, the country's largest student housing operator, in 2020. Last year, NPS partnered with Scape again, forming a strategic partnership valued at 700 million Australian dollars. The investment scope has also expanded beyond PBSA to include corporate rental housing (BTR, Build-to-Rent) and other 'Living' sector assets.

Recently, the NPS has begun considering the possibility of investing in domestic rental housing. In June, the NPS stated, "We held discussions with domestic and international real estate managers regarding the investment environment and regulatory obstacles facing the domestic private rental housing market." In a press briefing the same month, Kim Sung Joo, Chairman of the National Pension Service, cited the Netherlands’ public pension fund ABP and the U.S. teachers' retirement fund TIAA as examples, stating, "Foreign pension funds have entered the residential real estate market to secure long-term, stable cash flows." He added, "We are exploring new investment models for domestic rental housing, with the prerequisite of meeting our internal target return rates."

For pension funds with long-term investment horizons like NPS, alternative investments serve to diversify portfolios that are heavily weighted toward stocks and bonds, while providing stable long-term cash flows. By including income streams—such as real estate rents or infrastructure usage fees—that are less directly linked to fluctuations in the economy and stock markets, such investments help mitigate the overall volatility of fund assets when a particular asset class experiences sharp swings.

In the first half of this year, the NPS posted a domestic equities return of 107.37%, while alternative investments returned only 9.60%. However, in 2024, when domestic equities suffered a 6.94% loss, alternative investments produced a 17.09% gain, cushioning the volatility of the overall portfolio. As of the end of June, the valuation of the NPS’s alternative investments stood at KRW 260.9 trillion, accounting for 14% of the fund's total assets.

Korea Ranked 4th in APAC for Living Investment Preferences

Global institutional investors' perspective on the domestic 'Living' sector as an alternative investment destination is also evolving.

According to Cushman & Wakefield’s "2026 APAC Residential Investor Survey," released on August 27, Korea ranked fourth among Asia-Pacific markets for preferred 'Living' sector investment destinations, following Australia & New Zealand, Japan, and Singapore.

Some 85% of respondents said they plan to increase 'Living' sector investments over the next five years, with expected total investments reaching $33.2 billion. Across the APAC region, Build-to-Rent (BTR) and multifamily rental housing emerged as investors’ top choices in the 'Living' sector, while PBSA and co-living (shared housing) also ranked among the main options.

This content was produced with the assistance of AI translation services.