Investors’ interest in student housing, which started in the UK, has now crossed the Channel and is spreading all over Europe, driven by demand and the prospect of 100% occupancy rates, delegates heard at the PropertyEU Student Housing Investment Briefing, which was held in March at MIPIM in Cannes.
'It is no longer just about the UK,' said Philip Hillman, chairman of the JLL UK alternatives team. 'Investors are now looking at the rest of Europe and doing pretty substantial transactions. When I first got involved in this sector in the UK in the early Nineties people were very skeptical, but now it is being taken seriously.'
The attractions for investors are '100% occupancy rates, a very stable sustainable income return profile and a business model that in the UK has proved to be resilient to any shocks, be it the financial crisis or an increase in tuition fees,' said Kristof Vashegyi, vice president, UK Real Estate at JPMorgan Cazenove.
The UK is ten years ahead and remains the dominant market in Europe. Last year there were £5.5 bn of transactions in the sector, which accounted for 35% of the private purpose-built sector. This year, according to Hillman, 'we may not reach 2015 levels but we will still be at £3 bn plus'.
As the sector matures there is also an ongoing institutionalization and a shift from opportunistic to institutional money.
Unite Students, the largest group in the sector with 45,000 rooms in 26 British cities, has grown, created an efficient platform and gained economies of scale to the point that it will be converting to a REIT next year.
