By Jan Bjorkmann features@algarveresident.com
Jan Bjorkmann, Director Scandinavian Private Clients, Blacktower Financial Management Group.
One asset class has demonstrated its resilience during this recent economic turbulence. Student accommodation has remained a robust investment and emerged as sector of the property market in its own right.
A growing number of investors are attracted to the strong fundamentals which provide a secure income stream.
Student numbers are increasing each year due to record exam results at home and a greater influx of overseas students. Universities need quality accommodation to attract their share and currently there is a gross undersupply. The emergence in recent years of private student accommodation initiatives have therefore evolved. Private operators are now working with universities to purchase and develop their existing stock, or build new.
As an investment, the sector presents a compelling proposition. Increasing demand for beds outstrip supply, bad debts are low, occupancy is high and students pay their rent (which increases each year) in advance.
 Established returns. Photo: SUPPLIED. |  |
Only nine per cent of students are currently housed in private accommodation. Demand is likely to
continue growing, fuelled by increasing student numbers and the further decline in suitable university accommodation.
The situation in Europe is where the UK was a few years ago. There are some eight million students in the main EU countries and only 13 per cent in purpose-built accommodation.
Student accommodation is being seen as the single largest untapped real estate market in Western Europe.
Universities will continue to work in partnership with the private sector to provide suitable modern accommodation. This creates an attractive investment opportunity which benefits the universities, students and investors. Outsourcing accommodation frees universities to concentrate on their core educational activities. Students benefit from the increased availability of modern rooms with ensuite facilities, internet access, security and parking.
Investors are able to participate in this opportunity through a number of investment schemes that have emerged in recent years.
One such Fund that has been reviewed by Blacktower is The Coral Student Portfolio.
This offering presents a lower risk profile and targets returns in the range of 8-10 per cent net per annum. As a fund of funds, it invests in established UK schemes and providers, while also positioning to benefit from the enormous opportunities emerging in Western Europe.
By spreading exposure, the Fund aims to maximise returns and minimise dependency on one single provider.
The Coral Student Portfolio is EU-authorised and regulated in Luxembourg. It is managed by ex-Brandeaux colleagues Robert MacDonnell and John Kennedy, who were both involved in the market’s first ever student accommodation fund in 2000.
We spoke to Kennedy recently who said: “The fundamentals of this asset class are still very strong. The volatility of the markets creates the ideal opportunity and we have been able to formulate a liquidity strategy to meet this immediate market environment. At the same time, we are well placed to capitalise on opportunities as the dust settles on the recent market shake up.”
He added “As well as strong fundamentals, student accommodation is an investment which is easily understood by the general public. It’s a supply and demand story and immediately relevant to most people through their own personal experience.”
The Coral Student Portfolio launched in March 2009 and is currently up seven per cent. It is available in GBP, USD and Euros. All income from the fund can be taken penalty free.
For more information, please call 00 351 289 355 685
