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International Investors Remain Confident in Student Accommodation

Posted by Richard Ward in ,

Image courtesy of Flickr, Creative Commons

Research by industry specialists Savills suggests investment in student accommodation could reach £5.3 billion this year, an increase of 17% year-on-year.

The agency says the UK student sector is now an established global market able to attract international investment, which so far has been largely unaffected by Brexit.

According to Savills, international investors have nearly doubled their market share over the past few years, to 64% percent in 2016 from 35% in 2015.

Most of the investment is going into purpose-built accommodation projects, with 26% of the total value of international money coming from two Singaporean companies, Mapletree and GIC.

Commenting on the flow of investment from Singapore, director of Savills investment research and strategy Jacqui Daly, said: "Singaporean sovereign wealth fund GIC is one of the most experienced investors in the UK student housing sector. Their continued investment in 2016 is a massive vote of confidence in the sector."

Despite the uncertainty surrounding Brexit, Britain's decision to leave the European Union appears to have had little impact on investor appetite. It's estimated that £2.1 billion of student housing stock traded in the second half of 2016, versus £1.9 billion in the first six months of the year.

This can be partly attributed to the countercyclical nature of the market, making it a good hedge against other risks. Furthermore, the devaluation of sterling has made UK student investment especially attractive to international investors.

Despite the positives, there is one area that investors should be wary of, and that's how international students are treated post Brexit.