Archive for the ‘Student Property’ Category
The property investment market in the UK is experiencing mixed fortunes of late, house prices seem to be up one week down the next, growth expectations seem to change significantly depending on which mortgage lender publishes results and statistics one factor that most agree on is the rental prices in the main are steady and increasing.
The sector that seems to be dominating the headlines for consistent high performance is that of the Student Property Investment market.
With increases in the number of wealthy overseas students applying for UK Universities especially from locations such as China, India and the Middle East where high value is placed on a UK university education; in turn rental remand for purpose built student halls is on the increase and creating opportunity for property investors seeking stable and high rental incomes.
“As an investment, student accommodation is relatively low risk and provides a secure income”
“Occupancy levels remain high, especially when compared to the vacancy rates in some mainstream sectors, and most university towns remain under supplied.”
Every day the team at Gower & Mae speak with our current, new and registered clients regarding the property investment options in the market place. A consistent request from our clients is for more information on suitable student housing rental projects.
As with any property purchase a number of factors need to be considered when acquiring student property for investment, if the property is pre construction/under renovation who will develop the property? Who will manage the property for you once finished? What are their track records? Are the rental income projections realistic/proven and in line with the local market? Which universities are nearby to the property and are they likely to recommend their students this accommodation?
The list of questions we would recommend asking stretches well beyond this and we would suggest reviewing and requesting additional information on any project before purchasing. For those wanting to Learn More about the Student Property Investment market you can contact us in the UK and UAE to discuss further.
As the article below highlights there is an argument to shows the sector as the best performing property investment asset class in the UK currently and therefore one that property investors should at least gain a better understanding of.
Investment in student housing more than doubled last year as it emerged as a relative safe haven.
A record £2.7bn was invested in 2012, a 125pc increase on 2011 according to property agent CBRE. This was despite the number of applicants for the 2012-13 academic year falling 6.6pc to 653,600 according to UCAS figures.
“Although the number of student applications and acceptances fell in 2012, capital committed to the sector has grown dramatically over the last 12 months,” said Jo Winchester, head of student advisory at CBRE.
“The marker is increasingly dominated by specialist student funds and developers, who are deploying large amounts of capital in the regions as well as within London, making student accommodation a healthy sector nationally.
“As an investment, student accommodation is relatively low risk and provides a secure income. Occupancy levels remain high, especially when compared to the vacancy rates in some mainstream sectors, and most university towns remain under supplied.”
Demand for investment in student housing has been strong across the UK, with investment in the regions outpacing London in both 2012 and 2011. Investment is student accommodation has risen sharply over the past three years, during the worst financial crisis since the 1930s.
The jump in investment in 2012 followed a 53pc increase in 2011, and 124pc in 2010.
According to CBRE, student housing is strongly outperforming other property asset classes. Last year, it delivered total returns of 9.6pc for investors, compared with 4.4pc for all office properties and 2.2pc for all retail.
Source article published in The Telegraph Jan 2012.
What should investors consider when assessing property assets for investment?
Property is a popular asset class offering secure ownership of a physical asset providing for an effective hedge against inflation with ongoing rental income (or yields) and potential for capital appreciation which is realised on resale or refinancing.
Physical property and land have been associated with wealth and prosperity for many years and are widely recognised as a crucial part of an well diversified investment portfolio. This asset class proves very popular with investors as the concept of owning and renting property is widely accepted and recognised as a sound medium to longer term strategy.
When selecting property investment assets it is important to consider the macroeconomic and microeconomic environment of the country where the property is located to aid in carefully evaluating the balance between realistic yields and capital values. Many investors have been drawn into booming property investment markets focusing on the capital growth and lifestyle appeal so to make quick profits or to “flip” units for short term gains leaving rental income through yield (and the realism of achieving those yields through supply and demand) as a secondary concern.
A number of property investors have suffered during the financial crisis which began to manifest in 2007. In many locations this has lead to significantly reduced capital values. Many property investors have found themselves involved in off plan property development projects that either have shown the developer to be under capitalised and in financial distress unable to complete the project, or find themselves holding properties in poor locations which lack sound infrastructure for further economic development or real rental demand, therefore not providing for a realistic and sustainable level of ongoing return or potential for capital growth for many years to come. Limiting factors such as these effectively reduce the overall value of property assets.
When considering any property it is crucial to examine the fundamentals behind the offer and consider the balance of risk against reward. Gower & Mae Investments will only consider property investments in countries and locations believed to offer sound fundamentals for property investment, provide realistic rental yields and/or achievable levels of estimated capital growth. The majority of the properties that are offered by Gower & Mae are turnkey and investment based development projects which can suit property investors seeking rental income and provide for fully managed property investments.
All the properties on offer are purchased through legal contract with a form of third party professional management service available either with onsite rental management structures or full property maintenance facilities in place so to ensure the property is maintained and efficiently ran to generate ongoing rental return. Owning property in this way typically involves reduced or little input or involvement from the owner however investors must ensure they understand the costs involved in the ongoing management of there property investment. Rental payments are made directly to owners via the management company in most cases.
When looking at the market for property investments there are many different options available to choose from including: Buy to Let, Hotel Room Investment, Below Market Value (BMV), Leaseback Schemes, Sale and Rent Back Schemes, Commercial Property, Off Plan Developments, Accommodation for Students and Student Investment Property, Care Homes, Repossessions, Fully Managed Properties and Resort Property to name just a few.
The team at Gower & Mae look to source the best property investments and rental income opportunities within the market and deliver them to our clients through clear and informative methods that highlight why we feel the property represents a real opportunity. Feel free to contact us today to find out more about our products and services.
Investors prefer property
Will an increase in direct investment from institutions and funds cause growth in targeted hotspots read the article below about property investment to see what the Financial Times thinks.
Direct investment in real estate markets by pension funds and property sovereign wealth funds is set to double over the next decade, according to Jones Lang LaSalle, the property consultancy.
The findings follow a recent JPMorgan Asset Management study which found that 43 per cent of institutional investors were experimenting with real assets. The study, conducted last year, surveyed 2,500 institutional investors with assets of $7.8tn.
David Green-Morgan, global capital markets research director for JLL, says it is aware of a growing number of pension funds and SWFs that are considering making allocations to real estate for the first time.
Investment flows thus far have been concentrated in three cities, London, New York and Hong Kong, prompting concerns that a pricing bubble is forming in the “super prime” office and retail properties that are widely desired by pension funds and SWFs as a match for their long-term liabilities.
“Even in those countries where the broader economic outlook is challenging, the sheer weight of investor interest in ‘blue-chip’ or ‘super prime’ properties is continuing to push values up and there is a danger that yields will compress to uncompetitive levels,”
Whats in store for the property market in 2013?
The below article provides commentary on the UK property market and highlights London yet again as a target for property investment especially from overseas investors. Interestingly another comment in the article points to the rental level paid by overseas students who seek to live in their own private property which averages at just under £39,000 per year.
What are your predictions for the property market in the UK for 2013? Read on below to see what the Telegraphs opinion is.
Eco homes, Generation Rent and homes that earn their keep. Its time to find out what awaits the property sector this year.
In 2009, Luca and Lavinia Martino bought a classic Victorian terrace house in Clapham, south London, for £717,000. Now they have offered it for sale at £1 million and have had four or five viewings in the first week.
They are among the many accidental property millionaires created by the strange times we live in.Other sellers may struggle, and the number of sales may be only a third of what it was in the boom, but people who have bought in certain “micro-markets” continue to do well. The Martinos have both worked hard to pay for their house, he in the financial sector and she as a maritime engineer. They employ a live-in nanny to help with their two girls, Daphne, 4, and Lucrezia, 2. Space is tight and they want something bigger. “We need to cash in now and invest more in another house,” says Luca.
Does the property market here seem crazy compared to Rome, where they come from? “Prices are about 25 per cent higher than in Rome,” says Luca. There is talk that London is overheating, but international money continues to flow and some sellers are hanging on to their city assets rather than moving to the country where the doldrums may lurk.The recent census says it all. Home ownership has dropped to 64 per cent of the population and private renters have increased to 15 per cent, affected by the high prices and the need for large deposits.
In central London, international students are vying with bankers for flat rentals. One company reported that 37 per cent of its properties go to bankers, while 29 per cent go to students from around the world, paying an average £32,805 per year. One-bedroom and studio flats are the “hardest-working” sector of the market.
Student housing is top property asset according to the Financial Times
Here is a good article that shows the thinking from institutional investors and investment funds with regards to student accommodation. The asset has had a incredible rise in prominence over the past 10 years and it looks set to continue its popularity as Student Accommodation maintains the interest from investment groups.
Gower & Mae will be launching a number of new buy to let student property projects to market over the year, contact us to get information on these opportunities today.
Student housing has emerged as the best-performing asset in the US and UK property markets, according to figures published on Monday that show the sector generating double-digit returns on the back of strong rental growth.
In the UK, student housing funds have returned close to 12 per cent since the start of the year, compared with 1.2 per cent for all property, 8.2 per cent for equities and 4.9 per cent for gilts, according to data of IPD, the benchmark property index. The top performing US funds, meanwhile, are generating between 30 and 35 per cent, according to Jones Lang LaSalle, the property consultancy.
The student housing sector has ballooned from a fringe investment 10 years ago to a global market worth $200bn today.
The growth has been underpinned by a rise in the number of students enrolling on university courses, up from 98m in 2000 to 165m last year.
Philip Hillman, director of student housing and higher education at JLL, said: “Not so long ago, investors looked at student housing as an alternative property type. It is hard to justify that now, as it is becoming a must-have investment for most large funds.”
Gower & Mae will be launching into 2013 with a new and exciting student property investment project located in the South East of England. Becket Hall located in Canterbury Kent will be a purpose built student accommodation block comprising en suite and studio apartments. The property will benefit from communal facilities and be completed to a high and modern standard within a significant catchment area of two major universities, including the UK’s European University The University of Kent.
The project will be launched in 3 phases to prospective property investors. Phase 1 will be Becket Hall, Phase 2 Chaucer Court and Phase 3 Marlowe house. We anticipate a high volume of interest in this project as many of our clients have requested such property in the South East of England. If you do require further information on this project please contact us to discuss further and we will send you additional information.
There is a massive demand for high quality student accommodation in Canterbury.
With 26,260 full time students between the two main universities. The University of Kent and Canterbury Christ Church University, only 22.8%of those can be housed in University run accommodation. Students are resorting to privately rented accommodation which is often out dated with poor facilities.
Further details will be released in later 2012 into early 2013 contact us to receive information on Becket Hall in Canterbury
The increasing number of students from Asia choosing to study outside of their home country has played a key role in developing the student housing sector into a global real estate asset class, according to Jones Lang LaSalle’s new Global Student Housing Report.
In recent years, Asia has increased its market share as a source market for international students from 48 percent in 2004 to 52 percent in 2009 . In fact, the top five source markets globally are China, India and South Korea, followed by Germany and France in fourth and fifth . On the flip side, the most popular destinations for these students are the US, the UK, Australia, Germany and France.
“Strong economic growth in the key Asian markets has fuelled higher education enrolments globally. Over the past decade, countries like China, India and Vietnam have experienced rapid growth in the wealthier middle class, which has spurred demand for higher education and better housing options in destination countries,” said Philip Hillman, Lead Director, Student Housing and Higher Education, Jones Lang LaSalle.
Globally, the student housing market as a whole is estimated to be worth in excess of US$200bn, with study-abroad student numbers expected to increase from around 165m today to 263m by 2025. Market transaction volumes worldwide for the year ending June 2012 were US$4.7bn, with more assets trading above US$50m, showing healthy investor appetite for this asset class .
While ownership of student housing has traditionally been dominated by developer-operators, increasingly, equity funds, sovereign wealth funds, pension funds, investment managers and REITs are entering the market. The sector’s solid investment fundamentals have been characterised by its counter cyclical nature, high occupancy rates, strong demand drivers and positive income and rental growth.
Here is a article that highlights the amount of capital being invested into the UK student sector. Contact us to discuss student property investment further.
CBRE have stated that record amounts are being invested in student accommodation in the UK.
A record £2bn has been invested in student accommodation in the UK in the first three quarters of 2012 – an increase of 145% on that invested in the first nine months of 2011 – reports CBRE.
As well as rising investment, CBRE said it had pinpointed a number of changing trends.
Investors are now deploying more capital outside of London than within it, as over half of total investment in 2012 to date has been in the regions other than London.
The sector is also witnessing larger deals than before.
During the past 15 months, the market has seen five £100m plus transactions.
Prior to Q3 2011, no single deal had exceeded £85m.
CBRE said the University Partnerships Programme (UPP) regional portfolio typified the change with Dutch pension fund manager PGGM investing in a 60% stake in UPP’s assets this year, worth an estimated total of £840m.
Jo Winchester, head of student advisory, CBRE, said: “Total returns remains a key driver for investors, as they flock towards the impressive returns given by student accommodation for a second year in a row. Our data shows that student accommodation is outperforming other asset classes by some margin, as it has brought 9.6% returns in the year to September 2012. This compares to 5.4% for all offices and 2.2% for all retail in the year to August 2012.
For details on how you can invest into student property register your interest here
There is no doubt that student property investment in the UK is a hot topic at the moment. Gower & Mae have worked on a number of student property investment projects in the past and are consulting currently with developers in London and the South East on new ventures.
We are seeing increasing numbers of High Net Worth investors seeking to gain a foothold in this sector with interest specifically coming from some of our middle eastern and Asian contacts and clients.
Last week, 357,915 new UK students were accepted on university courses which will begin in October. And, with an additional 50,000 overseas students confirmed, demand for accommodation is high.
That’s good news for buy-to-let landlords — and parents with buying power.
Landlord Judith Hick owns a studio flat in Exeter. The property is worth £85,000 — up from its £65,000 purchase price — and she receives £515 monthly rent from an overseas postgraduate student
Its a topic that has been discussed for some time now. The issue that as a nation we are simply not building enough homes to satisfy demand, depending on the statistics you read we are currently building less homes now than we did after the 1st World War! The UK economy has a great reliance on the construction sector and calls from some Ministers are to build our way our of the current economic situation.
This is all well and good however the question as to where the funding will come from to fund this surge in UK property Investment is another matter? The below article highlights the growth in the private rental sector, we believe it also adds to the argument that owning rental property in the UK is a sound long term strategy.
It is important to consider that investments in property are not limited to traditional rental property and those property investors with rental property already in a portfolio could also consider alternatives to anther rental apartment or house in their local area.
Gower & Mae have been working on a number of projects that will offer rental income through ownership. These incomes can be greater than investing in a traditional property and some properties even come with full property management allowing for less time spent managing the property. Why not have a look at one of our projects The Royal Albert Dock Hotel and see for yourself. There are many ways to invest in property and Hotel investment is a big business rarely available to private investors we would be happy to send you information on this project as required.
So looks like only a matter of time now before pension fund and institutional money starts flooding into the construction market to finance build to rent schemes. We will be a nation of landlords and tenants which side will you be on?
Katja Hall, CBI chief policy director, said the government must support the findings of the Montague Review as it strives to boost housing supply and kick start the UK economy.
One of the recommendations made by Sir Adrian Montague yesterday was to boost institutional investment into new developments for rent.
Hall said: “This review has rightly shone a light on the importance of the private rented sector, and the role it plays in ensuring a healthy housing market.
“Institutional investors must be encouraged into this market, and the Government should consider the range of recommendations to support this, for example unlocking former public sector land.”
Hall added that while support for new rental developments was critical the government must be careful not to ignore the need for more owner occupied and social housing.
She said: “We need to look at the whole picture, and that means getting spades in the ground for all types of housing.
“The Government must continue to explore every available option to boost the housing market, for example the NewBuy scheme, and use its balance sheet innovatively to unlock housing investment.”