Returns on prime student accommodation in the regions are continuing to perform better than other property asset classes, new research suggests.
The ‘UK Student Housing Market View’, published by property consultancy CBRE, highlights growing interest in the sector from institutional investors.
The student accommodation sector’s second Real Estate Investment Trust (REIT), Empiric Student Property plc, launched this year and has already embarked on an acquisition programme including the 106-bed complex ‘The Brook’ in Selly Oak which it bought for £12 million in July.
Metchley Hall, also Selly Oak, changed hands recently when a private investor acquired the 67-bed, en-suite unit for £7 million.
Earlier this year, PwC completed the sale of a portfolio of former Opal properties to Australian student accommodation specialist Campus Living Villages.
The £245 million sale included the former Opal scheme on Bristol Road in Edgbaston while Cordea Savills acquired a £137million portofolio which included Jennens Court in the city centre.
Rosie Young, an associate director in the specialist markets team in the Birmingham office of CBRE, said: “At 6.15 per cent, yields in the prime regional student housing market are outperforming every other property asset class.
“As a result, deals in the sector have been somewhat frenetic. To match the demand and current undersupply, development needs to be amplified.
“However, the resurgence of the residential market in 2014 means the battle for development sites is now being won by house builders as the end values are much higher.
“Developers sitting on consented student sites will probably sell out to house builders or build new homes instead themselves. This is good news for investors in the sector, if not for students.”
There are 6,600 student beds with planning consent in Birmingham. However, Ms Young says the majority of these will not make it off the drawing board.