Investors flock to Britain's market for student rental housing
Drawn by the potential for better returns than in Britain's regular rental market, fund managers are betting big on higher education
The 18-year-old will begin a course at the Liverpool Institute for Performing Arts this month, renting a room in a downtown student residence operated by Unite Group for about £100 (HK$1,257) a week.
He will also spend thousands of pounds on tuition fees during the academic year, after the government tripled the maximum amount universities are allowed to charge.
"Taking on more debt worries me a bit, but I'm hoping to follow my dreams and that this course pays off," said Redhead, who will embark on foundation studies in acting.
Students prepared to pay a premium to live with their peers in city-centre locations are proving a bonanza for companies like Unite, Britain's biggest provider of student accommodation. That in turn is fuelling acquisitions in an industry where yields are higher than other parts of the British property market. Dutch pension-fund manager PGGM NV yesterday bought 60 per cent of Britain's second-largest student-housing operator in a deal valued at £840 million.
"There's a real focus by big financial institutions on alternative real-estate assets that are less cyclical and more defensive," said Philip Hillman, the London-based head of student housing at property broker Jones Lang LaSalle.
College dormitory rents are rising faster than inflation, encouraging firms including Mansion Student Accommodation Fund and operators backed by buyout firms Oaktree Capital Management and Carlyle Group to invest about £800 million on student homes in the first half, Jones Lang estimates. That was more than double the figure from a year earlier.