Cordea Savills has bought a 179-room student hall development in central Loughborough for €1337 million (£9.25 million) for its Student Hall Fund. The property is part of a high quality waterfront development, a short walk from Loughborough University which is ranked sixth in the Times University Guide. The purchase will generate a net running yield of 5.5% after all costs of management.
This latest purchase meets Cordea Savills' stock-picking investment strategy for the Student Hall Fund and will be directly let to students to capture the strong rental growth potential. Cordea Savills' research identifies 'Winning Cities' by analysing a combination of variables, including total number of students, percentage of overseas students, students per halls bed, students per potential bed, local house prices and the quality of the university. Loughborough scores particularly well, not only on the university's ranking, but also on the rate of growth of students which is currently at 5% per annum.
The new acquisition, known as Loughborough Wharf, will be ready for occupation by students from August 2007. It is being developed by Bournston, which is responsible for some of the highest quality student schemes in the UK.
Alison Puhar, the Fund Director, commented: "The student hall market remains a compelling investment opportunity. Despite the introduction of higher tuition fees, university applicant numbers continue to grow. Loughborough is seen as one of the best universities in the country with a growing student population of over 13,000, and the supply of student accommodation is not keeping up with demand. This purchase underlines our ability to source attractive deals in a competitive marketplace."
Our own research* found that student halls constitute a substantial and mature sector, offering better prospects than many other property sectors in terms of total returns and security of leases. It also highlights the potential diversification benefits of the sector as demand for education has little correlation with the economy.
*Cordea Savills estimates that the value of the student hall sector is aprox. €20 billion (£15 billion), Investment in UK Student Halls by Cordea Savills, March 2006
Source: Cordea Savills