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Student property investment tops £3 billion

Student Property Investment Tops £3 Billion

Investment in UK Student Property topped £3 billion in 2016, more than double the levels seen in 2013 in 2014.

New figures from Knight Frank reveal that investment in the purpose-built Student accommodation sector hit £3.1 billion in 2016, down from the record £5.1 billion in 2015, but significantly higher than the preceding.

Indeed, the data demonstrates that demand PBSA remains strong, with new investors continuing to enter the sector. Much of 2016’s activity was a result of the continued trend for portfolio acquisitions. The data shows that portfolios represented around 60 per cent of the deals concluded in 2016. The biggest single transaction was by Singaporean real estate fund Mapletree, which made its first foray into the sector following its acquisition of the Ardent Portfolio for £417m.

Funds were the most active investors in the sector over the course of the year investing around £1.4bn on 20 transactions, a figure which accounted for 47 per cent of total investment. Private equity firms accounted for 24 per cent of the total spend, with institutional investment marking up a further 12 per cent. REITs, such as GCP Student Living and Empiric Student Property, were also active over the course of the year following on from a busy 2015, driving just around £325m of investment, mainly for single asset deals.

“We expect the market will increasingly be driven by the REITs and pension funds as economies of scale assist these institutional buyers to create increasingly large portfolios with efficiencies of operation, branding and marketing,” says James Pullan, Head of Student Property for Knight Frank.

Rising Russian interest in student property?

14th July 2016

Russian interest in student property is rising this spring, according to one company.

Student property has long been one of the most sought-after investment types on, as the sector continues to see supply outweight demand, pushing yields higher than traditional, residential buy-to-let investments. Overseas investment in student housing, though, has tended to be from China and other Asian countries. In Q2 2016, that changed, according to InvestorSQ, with Russian demand seeing a “significant increase”.

The report comes at a time when Russian investors have largely been scaling back their activity in overseas markets, due to the devaluation of the rouble in recent years.

“Most of the enquiries are from investors looking for Student Property Investment opportunities based in London. Most foreign investors struggle to realize that higher yields can be achieved in other major UK cities, such as Manchester, Liverpool, Newcastle and Plymouth to name a few,” comments the site.

Approximately 70 per cent of enquiries in the three months to June 2016 came from investors wanting to expand their portfolio, while 30 per cent were focused on income revenue and personal use for family members who plan to study in the UK.

Investors enquired, in particular, about the EU referendum and what impact a Brexit would have upon the market.

“Needless to say we acknowledged the referendum as a factor that could cause a destabilizing effect on interest rates, property prices, mortgages, market pace, taxes, etc.,” comments InvestorSQ. “But the student property investment opportunities that we have on offer, are more geared towards generating rental income from students rather than capital growth appreciation.”

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Student property investment tops £3 billion


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