Private equity houses are investing more money in British student accommodation, eyeing robust rental returns in post-Covid, post-Brexit Britain, according to new research published by JLL.

More than a third of student property deals have been financed by private equity, compared with around 15% in total between 2016 and 2019, the real estate advisory giant said.

University applications are forecast to rise by 8.5% this year and demand for purpose-built student accommodation at present outstrips supply. These factors render the asset class compelling to private equity, which is sitting on more than $300 billion for property investments at a time when offices, retail and hotel assets have all been badly hit by Covid-19.

Key deals this year include US-based Ares Management’s first UK student property investment, a $217 million purchase of two newly built housing units in February. Ares is aiming to build a UK portfolio worth at least $550 million.

Meanwhile, a fund recently co-launched by Sunway and MBU Capital already stands at $151 million and is targeting a value of double that.

Veteran property lenders Daljit and Randeesh Sandhu have formed Precis Capital Partners, backed by TowerBrook Capital Partners, which owns a stake in nursery group La Maison Bleue, and will lend upwards of $69 million to finance property projects including student accommodation.

Private equity firms collectively own 55,000 student beds, according to JLL’s analysis of the 10-biggest landlords in the UK – equivalent to 8% of the entire market.

This figure was boosted significantly last year when Blackstone bought iQ Student Accommodation for nearly $6.5 billion in Britain’s largest-ever private property transaction.

Date published: 30 March 2021

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