Total investment in UK student accommodation – which includes Portergate Property Management’s successful Riverside House scheme in Salford – has broken the £2 billion mark for a third consecutive year.
According to new research from global property advisor CBRE, figures show that £2.37 billion was invested into the sector in 2014, surpassing 2013’s total of £2.2 billion.
The profile of investors in student housing shifted in 2014, with institutional investors, such as La Salle, Henderson, Blackrock and Pramerica, purchasing single assets of between £12 million and £60 million.
These institutional investors are buying into a trend set by companies like Portergate which are appealing to both individual buyers – particularly from overseas – and institutions such as pension funds.
“As the market has matured,” says Portergate Property Management chairman Anthony Jackson, “more traditional City players will invest in student accommodation. It will come to be seen as mainstream.
“We have been ahead of this game for some time now as our investors have seen. For a company like Portergate, it is essential we stay one step ahead of the mainstream so that we can capitalise on future investment trends.”
His comments are echoed by Jo Winchester, Head of Student Housing Advisory at CBRE, who said in the report: “Institutional investors, who previously would only consider long leased product or indirect investment, have made a number of purchases of direct let, directly owned assets.
“This is a dramatic shift from 2012, when the direct let institutional investor hardly registered in the market generic xenical.
“Now, with such a varied list of investors interested in this sector, UK student housing is arguably the most advanced of “alternative” assets, offering investors an “easy to understand” opportunity.”
The most recent UCAS figures show the highest ever intake of new undergraduates for the academic year 2014/15.
This type of continuous, stable demand for higher education in the UK has led to student accommodation becoming a reliably performing asset class. With a number of portfolio deals currently available, 2015 promises to be another big year for investment.