Former British Prime Minister Harold Wilson once said, “A week is a long time in politics”, though nobody is exactly sure when he actually said it. Still, if that was accurate during the 1960s, it is probably an understatement in the ultra-fast moving modern world of social media and instant financial transactions.
Whilst not always associated with the world of student housing, politics is watched closely across the globe by student property investors, developers and fund managers. At first glance, student property may appear to be damp patches in under heated walls, damage from drunken parties and making sure your student tenants pay their rent on time, but that is the very basic day to day stuff.The growth in the global student accommodation market over the last decade has been driven by huge developers, serious investors and large hedge fund and pension funds investing money in key markets, sometimes at key times.
And as such, this last week will have given some investors food for thought as from the UK to Brazil,and France to Venezuela there have been political developments (some subtle, some monumental) that will have attracted their attention and could influence future investment decisions. In the UK, the biggest prospective political event for investors and businesses is the potential that the UK may vote via referendum to leave the European Union. Such a move would have profound impact on student landlords and investment decisions with regards to the UK student housing market. If the tap was suddenly switched off to EU students coming to study in the UK, the UK market would look like a less attractive proposition to some investors. On top of that, the economic effects of leaving the EU are largely unknown and generally speaking investors don’t like uncertainty. Polls are showing that the referendum is expected to be very tight, with only a few percentage points in it either way.
In France, regional elections show an unprecedented strong performance from the far-right Front National party. On the face of it, it may not impact student accommodation a great deal, but investors will be following events there very closely. FN are an anti-EU party, as well as proposing to nationalise certain industries in France to minimise outside or foreign interference in French domestic affairs. Global investors may find their path to investing in French student housing blocked or limited should the FN ever get into power.
In Venezuela the picture looks completely different, and investors will be on alert. After years of the Chavez revolution, Venezuela appears to be turning its back on socialism. General Election results show that opposition parties have stormed to power and may even gain a 2/3 super majority needed to totally transform the country and the constitution. The expected result of this would be an opening up of the Venezuelan economy to outside and private investors.
This follows economic and consumer figures from Latin America this week that show consumers are spending more, often on foreign products and imports. Black Friday and Cyber Monday both had more impact and consumer interest in Brazil than in previous years, perhaps suggesting a trend or movement towards to more open economies and even more investment opportunities. Whilst political events don’t always appear to be significant to the student housing market, investors will be following them closely and somewhere down the line the events of the last week may well have a bearing on investment decisions made in an office in Shanghai, New York or London.