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Purpose-Built Student Accommodation finds huge levels of funding

Purpose-Built Student Accommodation finds huge levels of funding

Purpose Built Student Accommodation (PBSA) has now gone far beyond the point where we can describe it as ‘hitting the mainstream’, as some of global property’s biggest hitters are well and truly making the most of PBSA’s astounding rise.

As an asset class, student property is still a relatively new kid on the block, only really coming into focus around the time that student loans and fees were increased in the mid to late 2000’s. As this new system of higher education came into play it changed the landscape of student life forever with students starting to become more money conscious.

Since universities decided against increasing their housing stock and decided to reduce it there has been the opportunity for private developers to reap the rewards of skyrocketing interest in high quality accommodation.

American, European and Chinese investors have all already made a splash in the sector with huge investments in Birmingham, Edinburgh and the North West whilst British investors continue to pile large sums in whilst yields and capital gains remain so impressive.

With that in mind it’s no wonder that an investment trust that buys student accommodation has announced a new share issuance as yield-hungry investors continue to pile into the sector.

According to The Financial Times, Empiric Student Property, a large UK-listed student property fund with total assets of £635m, is aiming to raise a further £150m. The company plans to invest the cash into providing about 3,500 new beds, including 1,000 in London, following the purchase of a portfolio of sites and properties for approximately £112m.

Investment in PBSA hit its second-highest year on record in 2016, according to consultancy EY. Investors have been attracted by the promise of income and capital growth fuelled by a historic undersupply of student accommodation, but critics of the sector fear it could be hit by a harsher post-Brexit immigration policy.

According to figures from Unite, another large student property developer, there are 3.5 students for every purpose-built student bed, with a 60,000 increase in first year students predicted for the academic year beginning in 2017.

There seems to be no slowdown in demand for the property class. There is an argument that despite a stratospheric performance since universities decided to release much of their housing stock, there is still immense room for further growth especially in city centres and urban areas.

Many of the flagship projects announced by the bigger developers will be built in and around city centres such as Manchester, Leeds, Liverpool, Edinburgh and Birmingham. Whilst it’s true that student numbers have dipped slightly this year, over 400,000 new students are expected to hit university for the first time in September, bringing with them huge demand.

There is also huge demand for existing student properties, or ‘pods’ with new and existing landlords snapping up investment resale opportunities which allow them to reap the rewards of high yields and capital growth that the sector offers.

Certainly, it seems, this is a perfect time to be in student property. Looking for a new investment? We have some fantastic investment opportunities which are available now!