Over £1.6 billion has been invested in UK student accommodation in just nine months

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More than £1.6 billion has been invested in UK student accommodation in just nine months, as investors seek to tap in to one of property’s most lucrative asset classes. According to CBRE’s Student Accommodation Index, the sector has shown total returns of 9.95 per cent in the 12 months to September 2013, higher than IPD total returns on offices, industrial and retail property over the same period.

Total UK education exports in 2011 were worth £17.5 billion, making education the UK’s fifth largest services export sector, ahead of insurance and computer services. Government support for Higher Education in 2013 has buoyed investors’ confidence. Measures to reform visa processes, the statement of no intention to cap numbers of international students and the relaxation of penalties for universities who over-recruit students has sent a clear signal that the student accommodation sector is being primed for further growth.

Jo Winchester, Head of Student Housing Advisory, CBRE, said:


“International students spent over £10 billion on tuition and living expenses in 2011 / 12. We expect the number of international students in the UK will grow by 15 – 20 per cent over the next five years, as the demand for English-taught degrees continues to lure students from across the globe. The result of this popularity is reliably high occupancy rates in student residences and stable income streams, making the sector an attractive prospect for small and large investors alike. According to our Index, rental values for student accommodation in regional towns have increased by an average 3.5 per cent in 2012/13, showing healthy growth across the UK.”

The UK’s student accommodation sector is piquing the interest of a wide variety of investors. US multi-family and student housing operator Greystar recently purchased a portfolio previously operated by Opal worth £310 million. Australian student housing operator Campus Living is understood to be preferred bidder on a portfolio of 4,539 beds previously run by Opal. 2013 has also seen the launch of the first dedicated student housing REIT, GCP Student Living Plc, on the London Stock Exchange, offering smaller investors a new route into the sector.

 

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