Despite an overall decline in the number of students, investment in accommodation has risen rapidly over the last three years and is now nearly eight times higher than in 2009, according to an analysis by property consultants CBRE.
The biggest transaction last year was the recapitalisation of University Partnerships Programme (UPP) Regional Portfolio. Dutch pension fund manager PGGM recapitalised Barcap’s 60% stake in UPP’s assets, with an estimated value of £840 million.
‘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, CBRE.
‘Our latest 2012 data shows that student housing is outperforming other asset classes by some margin, as it has delivered 9.6% total returns in 2012. This compares to 4.4% for all offices and 2.2% for all retail over the same period,’ she explained.
She also pointed out that the market 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 undersupplied,’ she added.
Ray Withers, chief executive of property company Property Frontiers said that the latest figures from CBRE highlight further the on going demand for student accommodation across the UK both from those in higher education themselves and investors looking for a lucrative, counter cyclical asset class.
‘We have seen no let up in the volume of student property enquiries received in 2012 and are aware of the ever increasing numbers of projects being brought to market. Student property remains attractive as an investment where there is an imbalance between supply and demand but in some cities, supply issues are being met and so investors should, as ever, do their research and select the right place to invest,’ he added.
