Student property will remain a very profitable asset class giving robust return despite the existing disruption caused by the Covid-19 pandemic, according to Cushman & Wakefield.
The property firm sees student property as a solid, high income-producing asset class that will continue to offer stable income streams thanks to high occupancy levels.
Russell Hefferan, partner in Cushman & Wakefield’s Student Accommodation Capital Markets team, commented: “Overall, in the UK there is a healthy amount of student applications, with overseas numbers ahead of 2019 according to UCAS.
“From 2021 there is also going to be a continued increase in the number of UK 18-year olds coming through the system. The demand and supply dynamics remain positive for the sector and it is in good shape to weather the storm.”
90 North Real Estate Partners is among a host of investment firms that continue to have faith in the student property sector.
The company, in partnership with Rasameel Investment Company, has just acquired two newly built student accommodation properties in Edinburgh and Leicester for a combined purchase price of £22.2m.
Goods Corner in Edinburgh features 108 studio bed spaces and is situated opposite the University of Edinburgh’s King’s Building Campus, the main campus of the College of Science and Engineering, to the south of the city.
Dover Street in Leicester comprises 135 bed spaces and is located in the heart of the city, close to the railway station, University of Leicester and De Montfort University.
Both properties were constructed in 2018 and each have historically been 100% let with strong bookings for the 2020/21 academic year.
The combined purchase price of £22.2m represents the strength of the student accommodation sector in the UK, despite the current challenging economic climate.
The transaction demonstrates that the fundamentals of the market, such as university performance, asset quality, occupancy levels and micro-location, remain strong, according to Hefferan.
He said: “Whilst in the immediate term COVID-19 presents obvious challenges for the industry, this transaction provides an excellent example of the strong, long-term fundamentals student accommodation offers.”
These two new properties are in core locations and provide housing to high-ranked universities in what John Yeend, partner at 90 North Real Estate Partners, sees as “undersupplied markets”.
He commented: “With structuring to ensure continuity of income to cover this current period of occupational uncertainty, we expect these investments to deliver strong performance.”