Investor demand still strong amid emerging applications picture
Over £246 million of student housing investment deals have been transacted in the first quarter of 2012, new research from CBRE has revealed. In 2011, investment in student accommodation grew by nearly 50 per cent to over £1.1bn.
Demand for long leased product is very strong and as a result yields have sharpened to 5.5 per cent 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 has announced a 5.2 per cent drop in 2012 degree course applicants compared with the same point in the cycle as last year, but applications from non-EU countries rose by 13.7 per cent dominated by students from the Far East 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.”
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services firm (in terms of 2011 revenue). The Company has approximately 34,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.