At a time of economic uncertainty investors can be reassured that the Purpose-Built Student Accommodation (PBSA) market is demonstrating resilience and remains a strong option.
A good measure of the strength of a sector is whether big, institutional investors retain faith and continue to put money into it when, on the surface, times look a little tougher than usual. In particular, Asian investors are extremely enthusiastic about the UK student market.
Figures from JLL confirm this. In September, Singapore Press Holdings (SPH) made a significant investment in the sector worth more than £180m, covering a portfolio of assets across the UK. The firm is not known for its overseas acquisitions, making this a particularly significant move. It follows similar moves from other Singaporean firms such as Centurion, Mapletree and the Singaporean sovereign wealth fund GIC. SPH expects that demand for student accommodation in the UK will continue to rise, and this analysis is likely to persuade similar investments from other companies in the future.
Singapore is not the only country where interest in PBSA is rising. Another good example is Malaysia where Kumpulan Wang Persaraan has recently made two large investments close to universities in Birmingham and Edinburgh.
Philip Hillman, head of alternatives UK at JLL, said: “There has been significant interest and activity from Asia. UK student housing is rightly regarded by Asian investors as a defensive asset class.”
The rising number of annual admissions is a good example of how the sector is remaining resilient. Whilst it is true that the number of applicants from the European Union has fallen, the shortfall has been more than compensated for by international students from beyond Europe.
European students make up only 6% of the total UK student body, whereas students from further afield make up 11%. This latter percentage continues to rise thanks mainly to China and India where the number of applications to UK universities are up 20% and 36% respectively in the last year.
What is clear is that the UK PBSA sector is a serious investment option which continues to thrive, and that many consider it to be the sort of asset that can strengthen a portfolio against changing economic tides. If it’s good enough for the sort of foreign investment firms which employ teams of analysts and are investing hundreds of millions of pounds, then that should serve as a timely dose of confidence for smaller investors as well.