UK Student Property Investment Transaction Volumes are Forecast to Reach as High as £1.5bn this year
Yet another article that hightlinghts the demand we are seeing for both instituational and private investment into the student rental sector in the UK. Gower & Mae have been working on a fantastic Student Property Investment Project in Greenwich recently that has proven a big hit with our clients and attracted significant interest. We will be working on new projects in the coming months, if you maintain an interest in this type of property then please visit out London Student Property Investment page and register your interest.
UK student housing transaction volumes are forecast to reach as high as £1.5bn this year, according to CBRE forecasts, eclipsing last year’s £1.15bn, in a market favoured by both income-seeking real estate investors and senior debt lenders.
CBRE research shows around £246m worth of student accommodation deals closed in the first quarter of this year, with a number of deals expected to close later this year, including Blackstone’s sale of Nido Student Living for around £400m to Round Hill Capital.
The popularity of the segment is driven by a number of property dynamics, unique to student accommodation. Investors and lenders alike are attracted to the long leases and the demand-supply dynamic, which is yet to be diminished by rising student fees.
While UCAS has announced a 5.2% drop in 2012 degree course applicants, compared with the same point in the cycle as last year, interest from further afield is still incredibly strong, with a 12% increase in applicants from non-EU countries.This has been dominated by applicants from the Far East, where there has been a 10% increase, and more specifically from Hong Kong where there has been a 37% increase. The number of students applying from Australasia has also increased by 15%.CBRE, in a research paper on student housing wrote: “There is still be a huge over-subscription for university places on average across the country. In September 2011, there were 700,160 applicants, but only 492,030 were accepted. This is effectively 1.4 students to every place. An estimated 208,130 students – 30% of those that applied – could not get a place.”As a result yields have sharpened to 5.5% in top-tier regional towns for student housing let to universities. Yields in London remained stable due to a shortage of units and there is still strong investor demand for direct let property in the capital. Jo Winchester, head of student housing, CBRE, said: “Applications are currently 80,000 ahead of the number of acceptances in 2011. While we do not expect student numbers to fall nationally due to fee increases, we do anticipate wide variations at a local level.“Developers will need to not only consider student numbers and bed-spaces, but most critically the financial strength and popularity of universities in conjunction with the underlying dynamics of the property market. Support from universities together with clever structuring is likely to assist planning and funding solutions for new development.”