Malaysian investors have been taking more and more interest in UK student property, with even the EU referendum not putting a stop to growth in investment flow.
Cornerstone International or CSI Properties is an agency and consultancy specialising in overseas property for Malaysian buyers. Its clientele includes a fairly broad cross-section of investor types, and it is based on data from those clients’ activity that the company has reported that Malaysian investors are becoming rapidly and significantly more enamoured with the UK student sector.
The company reports that it saw continuous, marked growth in the number of enquiries and transactions that Malaysian investors were aiming at the UK student property investment market through 2016. CSI’s overall sales volumes for last year were up 60% compared to the year before, with UK properties accounting for more than half of that. The agency puts this partly down to the lower value of the pound following the result of the EU referendum, which created favourable exchange rates for Malaysian investors.
The majority of these UK property investments seem to be targeting student accommodation. According to a CSI spokesperson, student property purchases account for over 65% of all UK property sales that the company handles.
It is not hard to see the attraction that UK student housing holds for Malaysian investors. The sector is fast-growing, severely undersupplied in some geographies and has risen in recent years to become one of the UK’s star performers in terms of rental yields. The market for purpose-built student housing, in particular, has been strong and Knight Frank predicts that the sector will experience a further 2.5% rental growth and rise to a total value of £45.8 billion by September this year.
Furthermore, student property has a track record of being resistant to recessions. Student numbers are much less vulnerable to problems in the broader economy than other tenant bases, making the sector relatively well-insulated and generally resistant. CSI expects the same principles to apply when the effects of Brexit take hold and evidently so do the company’s clients. The consultancy predicts that Brexit will do little to discourage students from choosing to learn at popular UK institutions such as Oxford or the University of Manchester and that favourable exchange rates as a result of the weak pound may encourage some students as they have already encouraged some investors.
CSI is not the only Asian property specialist to issue a vote of confidence in UK student housing and neither is this sentiment confined to Malaysia. A number of Asian institutional investors have recently placed significant amounts of money in the sector, such as Singapore’s GIC which poured £227 million into a joint venture with UK student property specialist Unite.
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