Why student accommodation

1. Underpinned by supply and demand imbalance

2. Rapidly growing sector – Investment up 780% since 2009

3. Best performing property sector since 2011

4. High occupancy rates – multiple small tenants

5. Low cyclical volatility

6. Less volatile yields

7. Low risk profile

8. Robust income and rental growth- Annual appraisals

9. Increasingly liquid market

Structural Demand

  • Europe has more top universities than any other region of the World
  • The UK houses the second largest number of the top institutions after the USA
  • There has been a flight to quality in university demand
  • Growing international demand is complimenting recovering domestic demand

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International Demand

The OECD predicts that 7 million students will be studying outside of their country of birth. This compares with 4.1million in 2010. Increasingly European institutions are offering their courses in English to attract international students

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Demand – Flight to Quality

Increasing demand for higher ranked institutions : Higher university fees mean students are questioning their ‘value for money’ and choosing institutions with better employment prospects.

Higher-ranked institutions are better placed to offset lower domestic demand by attracting international students.

International Demand

Indian and China will increasingly drive the growth of the middle class

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Numbers (millions) and Share (Percent) of Global Middle Class

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Supply of poor student accommodation

  • Nearly 60% of student accommodation is of ‘Low Quality’ due to lack of investment.
  • The private sector has been absorbing all of the growth in demand for term-time accommodation. Universities have not been investing in accommodation.

Supply – reliance on the private sector

  • Private sector filling supply gap
  • PBSA can make up the shortfall and help solve the housing crisis

Recent investment growth in UK PBSA student accommodation asset class

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PrimeYields

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