A survey of key players in the market, including institutional investors and fund managers, found nearly a third of investors already invest in Ireland and the UK.
The research, from real estate group Savills and non-profit The Class Foundation, also found that investors plan to expand their presence in European purpose-build student accommodation portfolios (PBSA) by up to 70pc over the next two to five years.
Savills released its most recent Developmental Land Market Review, which notes that the student accommodation sector in Ireland presents an opportunity to investors and has led to a shift in how money is being spent in the industry.
Ebba Mowat, director development, agency and consultancy at Savills, said student housing development is seen as more lucrative than other sectors.
“Unlike other sectors facing greater economic uncertainty, lenders remain confident in funding student housing developments, with loan-to-cost ratios commonly reaching 65pc from traditional banks and over 70pc from alternative lenders,” she said.
“The ongoing shift in student demographics, coupled with stable rental yields and high occupancy rates, has made purpose-built student accommodation a highly attractive investment.”
In the report, Savills said the demand for more PBSAs stems from Brexit boosting Ireland’s appeal to international students and a growing numbers of domestic students entering third-level education.
According to the Higher Education Authority (HEA), there are about 89,600 full-time students in Dublin – 77pc of which are domestic students.
The report said Dublin has been unable to meet the demand for student accommodation, with a shortfall of 25,000 to 30,000 beds.
It also said construction activity outside of Dublin remained limited.
“The demand for student accommodation in Dublin far exceeds the current supply,” the report said.
Substantial improvements in infrastructure and local authority capabilities are essential to ensure planned developments progress from permissions to completed units.”
Ms Mowat noted that the country would need to see a more balanced regional development that would see construction moving outside the capital.
“For this redistribution to materialise effectively, significant investment in infrastructure and local planning capacity is crucial,” she said. “Otherwise, these developments risk prolonged delays, perpetuating Ireland’s overall housing supply challenges.”
A survey from estate agents Cushman and Wakefield last year found that Ireland ranked high as a preferred location for investment within the Europe, Middle East and Africa (EMEA) region, with the private rented and PBSA segments attracting most investor attention.
Tom McCabe, the company’s head of research and insights, said it signalled that investors are aware of Ireland’s “uniquely positive” demographic backdrop.
“It is clear from our survey responses that Ireland’s economic growth outlook and the tight supply/demand picture in our living markets represent further reasons why investors are attracted to the Irish market,” he said.