U.S. student housing property sales are expected to attract more institutional and overseas investors this year than even the past 12 months, when the so-called recession proof sector set a record with the help of investment giant Blackstone's purchase of the largest owner in the business.

A total of $18.9 billion in U.S. student housing properties traded hands in 2022, topping 2021's $11.5 billion in deals, according to a report from commercial real estate brokerage JLL. The biggest portion of 2022's deal volume came from Blackstone paying $12.8 billion to buy Austin, Texas-based American Campus Communities. American Campus Communities is the largest U.S. student housing operator, with 166 properties in its ownership portfolio and 38 more that it manages on behalf of other owners.

Without the Blackstone deal, 2022 would have been a down year for student housing transactions, as soaring interest rates curbed sales across most real estate types and lenders tightened their purse strings with economic uncertainty.

"The first half of 2022 was busy, but [because of] higher rates and less available debt financing, the second half of the year was much slower, " said Wes Rogers, CEO of Athens, Georgia-based Landmark Properties, one of the largest U.S. student housing owners and developers.

But investor activity could take off once interest rate increases settle down, which the industry expects to happen later this year.

“The fundamentals of student housing have never been stronger, which is why capital is flocking to the asset class,” JLL said in a statement. "Many investors consider student housing recession proof, as every lease has a parental guarantee and enrollment has historically increased during times of economic recession.”

Institutional investors are steadily increasing their total allocations, accelerating capital flows to student housing, which is also attracting more capital from overseas, according to JLL.

Cross-border capital represented 20% of U.S. student housing deals between 2017 and 2021, up from only 6.7% of market share between 2012 and 2016, JLL said in its student housing report.

“We are seeing significant interest from capital coming from the Middle East, Singapore and starting to hear rumblings around Latin America,” said Teddy Leatherman, managing director of JLL, who leads the brokerage's Dallas branch of its national student housing capital markets team, in a statement.

Last year, for example, Landmark Properties struck a deal with Canadian investor Manulife Investment Management to build student housing in the U.S., starting with a project near the University of Connecticut. It also announced a $2 billion deal with Abu Dhabi Investment Authority, one of the world’s largest sovereign wealth funds, to expand the venture's U.S. student housing portfolio.

Demand for off-campus housing continued to surge in 2022, up from 2021, and the sector is starting 2023 on a strong note as well. Schools such as Louisiana State University have helped drive demand by allowing freshmen to live off-campus for the first time. Others like Arizona State University have private developers building directly on campus.

Pre-leasing, a key metric for the student housing industry, increased for the 2022 fall term to push occupancy to an average of 93.7% for all universities and 94.7% in top-tier schools, Fred Pierce, CEO of Pierce Educations Properties, said in a video for real estate industry information firm Institutional Real Estate.

Pierce said the numbers were up between 2.5% and 2.7% from 2021 and are already up 7.4% for this year’s fall term, forecasting mid- to high 90% occupancy when school starts.

As with traditional apartments, student housing rents per bed have increased as well. Rents were up 8.8% in October compared to 2021,according to data cited by JLL from student housing data firm CollegeHouse.

Rent and occupancy increases came as overall student enrollment across the U.S. was down 1.1% last year, Pierce said. But he said the top-tier schools — where 50% or fewer of the applicants are accepted — saw enrollment rise 0.6%.