UK student accommodation deals hit £246m in Q1

Over £246 mln (EUR 297.6 mln) of student housing investment deals was transacted in the first quarter of 2012, new research from CBRE has revealed. In 2011, investment in student accommodation grew by nearly 50% to over £1.1bn.

Due to strong demand for long leased product, yields have sharpened to 5.5% in top-tier regional towns for student housing let to universities. Yields in London remained stable due to a shortage of units and there is still strong investor demand for direct let property in the capital.

UCAS, the Universities and Colleges Admissions Services, has announced a 5.2% drop in 2012 degree course applicants in the UK compared with the same point in the cycle as last year, but applications from non-EU countries rose by 13.7% dominated by students from the East Asia and in particular Hong Kong. As a result, CBRE anticipates that university places across the country will still be over-subscribed and that the strong demand for student accommodation will continue.

Jo Winchester, Head of Student Housing, CBRE, said: 'Applications are currently 80,000 ahead of the number of acceptances in 2011. While we do not expect student numbers to fall nationally due to fee increases, we do anticipate wide variations at a local level. However, it is still too early to identify which universities will have reduced cohorts in 2012 and how demand for accommodation will be affected in those towns.

'Looking ahead, developers will need to not only consider student numbers and bed-spaces, but most critically the financial strength and popularity of universities in conjunction with the underlying dynamics of the property market. Support from universities together with clever structuring is likely to assist planning and funding solutions for new development.'

Key players in the market include Unite, Carlyle and LaSalle Investment Management.