Russian billionaires are among a number of new investors buying up swathes of UK student accommodation, pushing sales this quarter to a record £3.3bn.
The transactions of high-end student halls in the first three months of the year have already outstripped full-year turnover of £2.5bn in 2014.
Research from the estate agent Savills shows that 37,000 beds have sold so far in 2015. Overseas investors are viewing the “alternative” property asset class as a safe haven.
Deals include the Russian oligarch Mikhail Fridman-backed investment vehicle LetterOne Treasury Services paying £532m for five central London sites, and Canada Pension Plan Investment Board (CPPIB) buying a £1.1bn portfolio with buildings across 17 of the largest university towns and cities in Britain. At the time of the purchase earlier this month, CPPIB said it expected to see “continued demand for well-located and well-managed student residences”.
The popularity of the student housing market has grown steadily, attracting investors that have typically invested in more conventional properties, such as offices. Rents can frequently be as much as £419 a week in some London student developments, and many are luxurious, with gyms, cinemas, karaoke rooms and bars.
Marcus Roberts, head of student investment at Savills, said: “This year has seen an unprecedented weight of money entering the sector, much of it for the first time. It has been interesting to see where the capital has been flowing from into the sector. It is fair to say it has been global.”
He added that the opportunity to buy chunky portfolios was appealing to investors wanting to make a big entrance into the sector, rather than buying buildings individually.
A number of landlords are looking to capitalise on the rising demand for the sector. Knightsbridge Student Housing is expected to fetch £500m from the sale of a 5,867-bed portfolio. Europa Capital and the US investor Greystar are understood to be among the bidders.