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London

Investment in student housing will rise to £3.5 bn as appetite for sector soars, says JLL

JLL predicts transaction figures will increase from £3.2 billion in 2016


​LONDON, 25th April 2017 - £1.4 billion worth of transactions completed in Q1 2017 in the student housing market up from £0.7 billion in Q1 2016 according to latest analysis from JLL.

JLL predicts that 2017 will see higher investment in the sector as a number of new entrants, predominantly from Asia, join more seasoned investors.

Analysis undertaken by the firm across 79 university cities and towns including London shows that nearly half have supply levels below 30%, highlighting strong development opportunities. Further restrictions on change of use from homes to HMO’s under Article 4 also means that purpose built student accommodation (PBSA) will play an increasingly important role in providing alternative accommodation.

The largest single asset transaction in Q1 was the purchase of 3,067 beds at Aston Student Village for £227m by a Joint Venture between Unite and GIC. JLL’s sale of Woburn Place in London on behalf of Unite Students to GCP Student Living for £135m reflected a value of £316,000 per bedroom - the highest price paid per bedroom to date. A number of portfolio transactions have also closed, including Blackstone’s sale of their Union State portfolio to CPPIB, on which JLL advised.

The research also highlights that while the impact of Brexit, the rise in fees, and the modest reduction in the number of 18 year olds in the UK have occurred, applications are still at higher levels than the 2015/16 academic year.

JLL believes that Government plans to introduce fast track degrees will increase the demand for PBSA as students would be unlikely to look for alternative accommodation if doing shorter degrees.

Philip Hillman, Chairman of JLL’s Alternatives team, commented: “Student accommodation continues to be seen as a defensive asset due to its stable income profile. For the rest of the year we will see investors rationalising their existing holdings rather than undertaking substantial portfolio changes. There will also be a move to more conservative pricing on development and forward funding portfolios compared to operational portfolios, reflecting the additional risk