Transactions in UK Student Accommodation Sector Jump by 20%

Transactions in the UK’s student accommodation market rose by 20% in H1 2014 compared to the same period last year, as the student accommodation sector continued to thrive as the country’s leading property asset class.

Transactions in UK Student Accommodation Sector Jump by 20%

This soaring investment caused the total amount of transactions to reach £1.13 billion, leading experts to predict that spending throughout the whole year will go beyond the massive £2bn of investment recorded in 2013.

The report released by CBRE stated that 64% of this year’s total transaction volume has been spent in major university towns and cities, including Newcastle, Glasgow, Edinburgh and Manchester.

A large bulk of this investment came from a strong contingent of foreign investors, many of whom originated from countries such as Australia, the Netherlands and the USA; who have only just entered the market demonstrating the worldwide appeal the UK student accommodation sector has now gained.

CBRE claim that these investment volumes are only set to grow in the forthcoming years as a result of increasing demand for purpose-built accommodation among students.

This rising demand is evidenced by the 4% increase in applications by domestic students and the 7% jump in applications from overseas students ahead of the 2014/15 academic year. This led applications to reach an impressive 659,030, dispelling fears that the rise in tuition fees would dissuade students from entering into university education.

This surge in popularity means demand for the limited amount of student pods throughout Britain will be fierce for a number of years, causing developers to continue building and the strong performance of the student market to be sustained over a long period of time.

Finally, the report warns that housing stock in the student accommodation sector across all major university towns and cities still remains chronically low, despite the levels of investment in the market seen this year. The property consultants claim that investors are extremely keen on the market due to their knowledge that demand for rooms will continue to outweigh supply for many years to come.

Highlight transactions in H1 2014:

• PwC has completed the sale of a portfolio previously owned by Opal to Australian student accommodation provider Campus Living Villages for £244.9mn. The portfolio is located across seven cities.

• The Unite UK Student Accommodation Fund has recently acquired a portfolio of nine properties worth £137mn, which was previously owned by Cordea Savills.

• Greystar has purchased the £174mn OCB portfolio of three major London assets.

Article adapted from Property Week


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