Developers and investors who see a strong future in the student housing space are generally bolstered by the demand trends for U.S. higher education and the risk profile of the tenants. Currently more than 20 million students are enrolled in a college or university in the United States. While the 2012 attendance figures show a 500,000 year-over-year decline, the majority of the decrease occurred among graduate students aged 25–29.

After John Carrafiell co-founded GreenOak Real Estate in 2010, the firm’s first investments were in New York, London and Tokyo. But in February, GreenOak and several partners announced that, after almost a year of talks, they had moved into Spain’s downtrodden property market and bought eight shopping centres for €160m.

Crowdfunding offers a number of ways to diversify within the real estate asset class.  Investors can, for example, become lenders whose loans are secured by a property (“first trust deed investing”), or take an ownership “buy and hold” position so as to participate in a property’s potential appreciation.  Investors can also diversify among different kinds of properties -- and commercial real estate has several sub-classes of property types that an investor should be familiar with. 

Let's get one thing straight: Spain wants capital into its real estate market, and it doesn't really care if it is foreign.

So the private equity real estate industry can be skeptical all it wants about the entry of hedge funds, credit funds or anything else that can be labeled 'hot money' that might already be driving down yields. The issue is Spain wants the money in, and that's that. (The same goes for Ireland too, by the way.)

As Philip Charls, the former CEO of the European Public Real Estate Association (EPRA), said in January 2013: "The Spanish and Irish governments have realized that the best way to attract domestic and international capital into their real estate markets and so underpin banking systems that are laden with property debt, is to make the sector attractive to investors."

Middle Eastern investors are expected to invest $180 billion in commercial real estate markets outside of their own region over the next decade, according to research from global property advisor CBRE.

The major increase in flows of Middle Eastern capital into global markets is emerging from what the firm called “the extraordinary mismatch” between the lack of institutional real estate in domestic markets and the huge spending power concentrated in the region.

Europe is the preferred target with 80 percent, equating to around $145 billion, targeting the region over the next decade. Close to $85 billion will flow into the UK, with $60 billion directed at continental Europe. France, Germany, Italy and Spain are among the key target markets, the report adds.

Middle Eastern investors are tipped to spend $145bn on European commercial real estate in the next decade.

Property valuation is an art, not a science; there are so many factors involved in estimating value that appraisers always make clear that they are only giving an opinion of a property’s value.  The underlying economic bases of value include: at what cost a substitute property can be obtained; estimating future income of the property; how change (nearby development and other trends) affects value; how competition will affect profits; whether contemplated improvements make a net contribution to value; whether the property’s use is in conformity with other activities in the area; supply and demand; and what the highest and best use of the land might be.

One of the unique features of student housing is that leasing is offered by room or bed, and not an entire unit. This represents the shared nature of the accommodations, with nearly universal “roommate” living arrangements, and allows individual renters to be charged based on their specific bed and share of the applicable common areas. Leasing terms are typically of one-year durations, which lead to a high annual turnover and an active shortened leasing cycle requiring intense marketing.

Merlin Properties has filed for Spanish REIT status, with a €1.5bn IPO set for later this month.

The company will become a Spanish REIT or SOCIMI (sociedades cotizadas de inversión en el mercado inmobiliario).

There are two major techniques for measuring rates of return or valuations from real estate investments; ratios, which are simple arithmetic computations, and yields, which discount future income to account for the time value of money.  We’ve earlier discussed how loan-to-value ratios can help understand real estate loans.  Here we discuss the “cap rate” ratio, one of the more important calculations for valuation purposes.

Investors are interested not only in how much money they will receive, but when they will receive it.  The internal rate of return figure (“IRR”) incorporates the “time value of money” and thus provides a fuller analysis of return on investment.

After the worst housing crisis in the country’s history, signs of a recovery are starting to appear. Home sales jumped 48 percent to more than 81,000 in the first quarter, according to data compiled by the Ministry of Public Works and Housing. Mortgage approvals rose in March for the first time since 2010 as the property market starts to stabilize six years after triggering the most severe recession in five decades.

Self-storage businesses offer space-strapped customers a secure place in which to store things they don’t need right now, but can’t bring themselves to throw away.  These facilities have become big business; nearly 1 in 10 American households uses one of about 50,000 self-storage facilities.  The sector has generated more than $22 billion in annual U.S. revenues, and rentable space now totals more than three times the size of Manhattan island.  Television shows like “Storage Wars” and “Auction Hunters” have grown out of the phenomenon.

In any investment opportunity, investors are not only interested in how much money they would potentially receive, but when they would potentially receive it. The IRR calculation is a key aid for investors in evaluating investment opportunities because it helps to equate funds flow over different periods to their net present value, thus applying the key underlying concept of the time value of money. This concept holds that a dollar today is worth more than a dollar tomorrow, due to inflation, opportunity cost, and risk.

You can think of cash flow investing the same way you think about dividends with stocks. At some interval, whether it is monthly, quarterly, semi-annually or annually, you will receive regular cash distributions from your investment. You are buying a portion, or all, of an asset that can be leased or otherwise used to generate income.

Crowdfunding can be an attractive vehicle by which foreign nationals (non-U.S. citizens or residents) can invest in U.S. real estate.  It is often helpful when such foreign investors form a U.S. entity (like a corporation); reporting requirements for the crowdfunding company are simplified, and the investors can set up a legal structure that provides some protections and helps to minimize overall taxes.

Passive investors in crowdfunded real estate transactions may not be familiar with some of the various ways that return on investment can be calculated in the real estate world.  Here we explore one of the most common measures, the “cash-on-cash” return.   

Like all investments, real estate involves risks – and the expected returns on investment usually vary commensurately with the riskiness of a particular project.   We’ve discussed elsewhere some of the due diligence needed to analyze risks associated with different property types.  Here, we review some of the more basic risks involved with all kinds of investments. 

Every hour in the month of March 2014, more than $60,000 dollars were raised via crowdfunding throughout the world. Yes, that’s right - $60,000 per hour, each and every day. Driven by the same forces as Moore’s Law (the observation that computing power doubles every 2 years) worldwide crowdfunding is currently doubling around ten times faster – nearly every two months. As crowdfunding worldwide continues to gain in popularity, more and more data has shown the industry’s vast potential. Not only did the month of March produce exceptional gains via crowdfunding, but the first three months of 2014 showed total amounts raised by crowdfunding of approximately $124 million. 

Given the vast wealth controlled by sovereign wealth funds, it is little wonder that they are among the largest investors in European property. Exactly how large has been revealed by property agent Savills, which says SWFs invested a total of €5.5 billion in 2013 – an increase of 30 percent on €4.2 billion the previous year.

Savills was not at liberty to divulge details of all the transactions it had counted, but it noted that there were five SFWs from the Middle East and the Asia-Pacific region among the top investors in Europe. That said, SWFs were involved in just nine transactions, meaning that the average deal size was a whopping €700 million. That is quite the jump from an average deal size of €247 million in 2012, although two were portfolio purchases.