Opinion

A Record Year for Student Accommodation In 2012

Figures have shown that 2012 was a vintage year for student accommodation in the UK. According to the CBRE, last year there was a record £2.7 billion transacted. This marks a 125 per cent increase on investment levels in 2011 and comes despite the overall decline in the number of students in the UK. Student accommodation has proven itself to be a property heavyweight in recent years, with investment rising rapidly since 2009.

It is estimated that the sector has grown almost eightfold over a three year period, but 2012 was undoubtedly the high point. The biggest transaction was the recapitalisation of the University Partnerships Programme (UPP) Regional Portfolio, with the Dutch pension fund manager PGGM recapitalising Barcap's 60 per cent stake in UPP assets. The deal had an estimated value of £840 million.

Jo Winchester, head of Student Advisory, CBRE, commented: "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. "

What's more, investment in student accommodation is viewed as relatively low risk and is capable of providing buyers with a secure income. Despite falling student numbers, occupancy levels remain high and in many university towns there is currently a lack of supply. To fill the gap in popular Nottingham, Knight Knox International has recently announced the creation of a second purpose built, exclusive student property. Known as Minerva House, the 56-unit development will be built over five floors, with 151 individual studios, offering three different investment options for different student budgets. A range of communal facilities such as a gymnasium and entertainment lounge will also be available for tenants.

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