The student housing investment market is heading towards a record year with JLL predicting that £2bn worth of assets will go under offer in the final quarter of this year – the same value achieved during the entirety of 2013.
Some £200m is currently under offer at the close of the third quarter with a further £360m being marketed, and £1.5bn worth of transactions completed in the year so far. Some 65% of transaction values, including portfolios, have been for assets outside of London.
JLL said notable deals in the third quarter included Unite’s acquisition of the Cordea Savills portfolio for £137m, the disposal of Collegelands, Glasgow, which reflected a yield of 5.75%, and the Blackrock acquisition of the Print World, Exeter, for £40m.
Philip Hillman, JLL head of student housing investment, predicted “a flurry” of deals to near completion before the year ended, with strong university enrolments and robust occupancy levels across the sector proving to be a key driver.
“In particular, we expect to see secondary disposals come to market following realignment of purchased portfolios this year and an increase in forward funding transactions, particularly in the regions,” Hillman said.
“Also, with the uncertainty of the Scottish referendum now removed, we expect to see more transactions take place north of the border,” he added.
JLL data indicates that land values for well-located sites have risen 25% this year with provincial yields hardening for well-located, good quality assets.
But JLL notes, however, that the development pipeline is constrained because of “restrictive” planning regimes and strong alternative use values.
The data shows that about 9,704 beds came on line in London for September this year, although a diminishing pipeline is expected for the next four years.