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UK sees record investment in student housing market
Total investment volumes in the UK student housing market reached record levels in the first three quarters of 2015, exceeding US investment volumes for the first time, new data shows. In terms of larger deals of $7.5 million plus, excluding land sales, the UK saw investment of $6.5 billion, compared to just over $3 billion in the US, according to research from international real estate advisors Savills. The firm’s World Student Housing Report states that the UK’s record levels have been driven by foreign investment, led by North America which was the source of 80% of all cross border deals in the 12 months to September 2015. All the top global student investment deals in 2015 have been into the UK, led by the Canada Pension Plan Investment Board’s $1.7 billion purchase of the Liberty Living Portfolio and Greystar/PSP’s purchase of the Nido London Portfolio for $920 million. ‘Reflecting the maturity of the UK market, the major transactions have all been portfolio deals. Increased investment activity has brought with it yield compression, particularly for investments in prime London where net initial yields on direct let properties are now around 5%,’ said Paul Tostevin, associate director of Savills World Research. After the UK, Savills cites The Netherlands, with its English language education offer, emerging as a highly investible proposition. The Netherlands has seen average annual investment of $200 million in the last three years, the majority of which has come from private, domestic capital, but foreign investment is growing. In Germany early investors have successfully launched a premium product, filling a gap in the market next to the not for profit Studentenwerk offer, while France’s student housing market is characterised by growing investor interest but limited available supply. This has put downward pressure on French prime student yields, which stand at 5.4%. Beyond Europe, Australia is a key emerging market given its high quality of life and proximity to two of the top five source markets for international students in 2015 which are China and South Korea. ‘This is the first time the UK has outpaced the US in student housing investment which is quite remarkable given their disparate sizes. North American, Middle Eastern and Russian investors have led the charge into the UK,’ said Marcus Roberts, the firm’s director of Student Investment and Development. ‘We expect continued global competition for stock, combined with limited opportunities, to lead to further yield compression in the near term, but with the UK remaining the second most popular destination for international students, top tier university cities with low supply, such as London, Bristol and Edinburgh, still offer potential,’ he added. Continue reading
Tenant demand remains strong for UK residential landlords
Tenant demand in the UK’s private rented sector remains strong, with four in 10 landlords reporting an increase in the areas where they operate, new research shows. While one in five are uncertain about demand in the areas they own property, on average 40% of landlords have seen an increase, according to the latest monthly survey report from the National Landlords Association (NLA). The East of England saw the biggest net growth in tenant demand with a 48% increase. This was closely followed by the South West at 45% and the South East and Outer London at 41% and 40% respectively. The research also found that on average just 6% of landlords reported a decrease in tenant demand in the last three months. Landlords in the North East reported the largest net decrease in tenant demand of all the regions with a 15% decline in demand, closely followed by 12% in Wales and Yorkshire and 11% in the North West. ‘These figures demonstrate just how important the private rented sector is in housing a growing number of people. Our research indicates that 5% of landlords will sell up following the Government’s plans to remove mortgage interest relief for landlords, which could affect some 600,000 tenancies,’ said Carolyn Uphill, NLA chairman. ‘The Government’s planned changes, which will be phased over a period of years, gives landlords effected time to review their finances, but some will still be forced to sell or trade at a loss which is unsustainable and the projected impact will mean that ultimately renters will lose out as a dwindling stock drives up prices and competition for homes,’ she added. Continue reading
Scotland sees strong rise in property sales in third quarter of 2015
Residential property sales in Scotland increased by 6.5% in the third quarter of 2015 and the total value of sales by 6% compared to the same period in 2014, the latest index data shows. This is the highest volume and total value of quarterly sales in Scotland since 2009, according to the figures published by the Registers of Scotland. The highest rise in volume of sales was recorded in West Lothian, with an annual increase of 23.1% compared with the same quarter the previous year while Aberdeenshire saw a drop of 13.5%, the steepest fall. The data also shows that Edinburgh was the largest market with sales of over £805 million for the quarter, an increase of 6.2% on the previous year. But prices have dipped slightly. The average property price in the quarter was £169,397 a drop of 0.5% compared to the previous year. Semidetached properties showed an increase of 2% to £159,854 on the previous year while detached, terraces and flats saw decreases in average prices of 0.9%, 3.1% and 2.4% respectively. Overall the Scottish property market is demonstrating healthy growth and stability with good quality properties selling quickly, according to Simon Brown, partner and head of residential sales at CKD Galbraith. ‘These are very encouraging signs for the final months of year and moving into 2016. Success in the current market comes down to a number of key ingredients: sensitive pricing, demand for high quality property and effective marketing,’ he added. Michelle Grant, investment director at Grant Property, believes that the outlook for the market continues to be positive. ‘This signals growing confidence and has created a more competitive environment for buyers and investors,’ he said. ‘Glasgow and Edinburgh are proving particularly popular with most properties selling for more than the Home Report valuation, on some occasions up to 15% more. It is also not uncommon to be bidding against up to eight to 10 people for a property in sought after areas of the capital,’ he pointed out. ‘From a buy to let perspective we are experiencing 100% occupancy eight out of 12 cities in which we operate with high levels of demand from tenants. This is great news for investors looking to secure assets with long term yield prospects,’ he added. Continue reading
