The UK Higher Education sector is well regarded internationally. Understandably, students require high quality accommodation at reasonable rents, if they are to make the most of their studies. In a number of the UK’s major educational centres especially London, there is a shortage of appropriate accommodation, particularly for international and post-graduate students.
This undersupply creates an interesting market dynamic for specialist developers to create the space that the students need and for investors to participate in attractive returns on capital through the development process.
Cluttons Capital Partners LLP (CCP) has successfully advised Bahrain based Seera Investment Bank BSC in a structured financing transaction for a high quality student accommodation scheme located in Aldgate and within Zone 1. The development project has been specifically designed to cater for the growing international student market and is to provide 310 premium quality student rooms in a new 18 storey tower together with 29 student loft apartments and 35000 sq ft of commercial space. Construction of the project is well advanced with completion due March 2013.
Darren McGill who led the transaction stated that “CCP as an FSA regulated business is uniquely positioned to structure private equity deals on behalf of both investors and developers. With our network of offices in the Middle and Far East we have access to a depth of overseas investors. With the continued lack of senior debt for development projects, the demand for higher levels of equity will continue to be strong for the foreseeable future and CCP is well placed to provide developers the necessary equity to bridge this gap.
Prateek Sharma, who led the transaction at Seera Investment Bank stated that the Bank’s investment strategy is to maintain a diversified investment portfolio geographically and industry wise, focusing mainly on defensive sectors underpinned by strong fundamental demand, and to avoid speculation driven sectors. This investment in the UK’s student accommodation sector demonstrates Seera’s commitment to invest in transactions with strong fundamentals and which are in line with the Bank’s investment strategy.
Ian Gladwin, Chief Executive, Cluttons in the Middle East concludes, “London has long been the most popular location for Middle Eastern overseas property investment and this remains true now, as it is perceived as a ‘safe haven’ for investment in the current economic climate. Demand is primarily from Bahrain and the UAE and is marked by an interest in diversifying investment portfolios. With 2.5 million students studying in the UK at the moment, 100,000 of whom are international, the strength of the student housing market cannot be underestimated. Cluttons is delighted to have advised on this recent scheme and is confident that many further opportunities will emerge in the marketplace.”