US company makes UK student accommodation investment

Greystar purchases Nido portfolio for £600m

US company makes UK student accommodation investment

The student housing market is fast becoming a hotspot for real estate investors. In 2014, investments in student accommodation peaked at £2.4bn, according to real estate company CBRE and the latest purchase to add fuel to this burgeoning movement comes from American company Greystar.

London’s Nido portfolio of student accommodation has been sold to Greystar by British real estate investment firm Round Hill Capital for £600m ($902m). The blocks of flats, situated in Notting Hill, King’s Cross and Spitalfields are aimed towards the higher end of the student market, offering gyms, bars, cinemas and fitness rooms. These premium student houses were purchased from Blackstone by Round Hill Capital in 2012 for £415m and a decision in 2013 by the British government to dissolve the limit on the amount of students that universities can admit has driven an upsurge in UK student accommodation investment. With the dissolution of the cap on student admissions coming into effect this autumn, a growth in the number of foreign entrants studying at British universities is expected.

This purchase follows last week’s transactions by the Canada Pension Plan Investment Board, which bought the UK’s 16,700-room Liberty Living portfolio of student accommodation for £1.1bn, and Luxembourg-based company LetterOne’s outlay of £532m for Pure Student Living, whose properties are spread out across five separate sites in the capital city. However, Greystar are not novices in the UK student accommodation game. Last year they secured 1,129 student beds in the heart of London and this was preceded by the company purchasing 21 student properties in 2013, consisting of over 6,900 beds.

Real estate investments have usually been centred on commercial property, like retail, offices and industrial sites, according to a report from the Investment Property Forum. However, with investors searching for larger, long-term returns, the sectors seeing significant growth are those generally believed to be alternative investments – student housing, hotels, healthcare and privately rented residential real estate.

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