Student housing investment soars to record high

Student housing investment has soared to a record high, according to new research. Investment in student accommodation so far this year totals £2 billion - a staggering increase of 145 per cent compared to the same period last year.

Many experts were worried that rising tuition fees in the sector would deter students from applying to UK institutions. But investors are filling in more applications than ever before - and in larger numbers.

During the past 15 months, the market has an unprecedented number of high-value transactions as the booming sector pushes deals to new highs. Prior to Q3 2011, no single deal had exceeded £85 million. Now, the market has seen five transactions worth £100 million and over.
The University Partnerships Programme (UPP) Regional Portfolio typifies this behaviour, adds CBRE. Dutch pension fund manager PGGM invested in a 60% stake in UPP's assets this year, worth an estimated total of £840 million.

As well as rising investment, CBRE has noted another surprising trend in the student housing sector, as investors look around the country to find the highest yields possible. Indeed, more capital is now being injected into accommodation outside of London than within it - over half of the total amount invested in 2012 to date has been in regions away from the capital.

Jo Winchester, Head of Student Advisory at CBRE, comments: "Total returns remain a key driver for investors, as they flock towards the impressive returns given by student accommodation for a second year in a row. Our data shows that student accommodation is outperforming other asset classes by some margin, as it has brought 9.6 per cent returns in the year to September 2012. This compares to 5.4 per cent for all offices and 2.2 per cent for all retail in the year to August 2012."

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