One of the panel discussions on the conference programme at the inaugural MIPIM UK real estate fair held at Olympia in London in mid-October carried the title: ‘Student housing: is it really “alternative” anymore?’
One of the panel discussions on the conference programme at the inaugural MIPIM UK real estate fair held at Olympia in London in mid-October carried the title: ‘Student housing: is it really “alternative” anymore?’
The rhetorical phrasing of the question is an indication of how far the sector has progressed as an asset class in recent years. While it will never rival offices, retail or logistics in terms of its overall share of the European property pie, it is becoming increasingly attractive as a niche sector and global institutional investors are making moves to include it in their real estate portfolios.
The UK market is the benchmark for privately owned, purpose-built student accommodation in Europe and in the past 18 months the market has seen the arrival of two newcomers in the listed sector - GCP Student Living and Empiric Student Property REIT. Their flotations mark a new phase in the development of the sector which until recently was dominated by Bristol-based Unite Students.
The emergence of a listed sector for student accommodation is auspicious but the private equity sector has witnessed even stronger growth as developer-operators harness the financial resources of big institutional investors.
In August, US asset management giant BlackRock acquired a student accommodation scheme in the UK city of Exeter from Moorfield Real Estate Fund II (MREFII) for £40 mln (€50 mln) for its UK Property Fund, bringing its expenditure on student accommodation in the last 12 months to more than £100 mln. Meanwhile, Singapore’s sovereign wealth fund GIC has backed a £90 mln (€112 mln) whole loan facility for UK student accommodation provider Urbanest while CBRE Global Multi Manager (GMM) has also targeted student housing in the UK via a vehicle with Curlew Capital.
Cross-border ventures and partnerships are also sprouting in Continental Europe. Earlier this year UK privately owned multi-family office LJ Group committed a total of €100 mln of equity to Cresco Capital Group’s German student housing venture, Cresco Urban Yurt. And in the Netherlands, German student housing specialist International Campus is injecting €150 mln into a portfolio of five buildings as part of a joint venture with Dutch operator Stichting Duwo. In fact, the Netherlands alongside Germany is leading the way on the Continent and a specialist vehicle has now also appeared in this country.
In July, Dutch fund manager Bouwfonds Investment Management raised new commitments of €110 mln for the Bouwfonds European Student Housing Fund. Another big Dutch asset manager Syntrus Achmea is likewise seeking investors for its student accommodation schemes after building a portfolio of 1,200 student beds, with a pipeline of 4,000 more.
Clearly, student housing is making the grade.