Partner Article

Investment in student housing rises 125%

Student accommodation projects received record levels of investment last year, according to figures from property firm, CBRE.

Investors pumped £2.7bn into housing for students in 2012, which is a 125% increase in comparison with the previous 12 months.

Despite a drop in student numbers, which UCAS recorded as a 6.6% fall for 2012/2013, CBRE cheered rapid investment growth over the past three years, which is now eight times higher than in 2009.

Jo Winchester, head of student advisory for CBRE, commented: “Although the number of student applications and acceptances fell in 2012, capital committed to the sector has grown dramatically over the last 12 months.

“Our latest 2012 data shows that student housing is outperforming other asset classes by some margin, as it has delivered 9.6 per cent total returns in 2012.

“This compares to 4.4 per cent for all offices and 2.2 per cent for all retail over the same period. 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.”

The UK’s most significant deal last year was the Dutch firm PGGM’s recapitalisation of Barcap’s 60% asset stake in University Partnerships Programme (UPP) regional portfolio, worth around £840m.

Ms Winchester concluded: “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.”

This was posted in Bdaily's Members' News section by Miranda Dobson .