Newcastle's Economy Could Be Harmed by Brexit
18th Jan 2018
A report by the Higher Education Policy Institute (HEPI) suggests international students contribute nearly £700m to the North-East economy each year, supporting hundreds of jobs and businesses.
There are concerns both Brexit and Government's efforts to reduce immigration numbers could harm the British economy.
Newcastle's economy could be particularly damaged due to tougher immigration rules, with the city benefiting to the tune of £300m due to international students.
Commenting on the report, HEPI director Nick Hillman said: "Fewer international students would mean a lot fewer jobs in all areas of the UK, because international students spend money in their universities, in their local economies, and on products that are manufactured across the UK.
"It is literally the sandwich shops, the bike shops, the taxi firms, it is the nightclubs, it's the bookshops. Almost every part of the British economy benefits from having international students."
The report has been supported by the North-East England Chamber of Commerce, which also highlighted the long-term benefits from bringing overseas students to the region.
On average a typical EU student is estimated to generate a net gain of £87,000 for the UK economy over the course of their studies, while a non-EU international student generates around £102,000.
The chief executive of Watkin Jones is to step down once a suitable successor has been found.
Mark Watkin Jones cited personal reasons for stepping aside, saying: "After careful consideration I have decided that it is necessary for me to step back from my position as chief executive officer.
"Solid foundations are in place for my successor to work with, including an excellent management team that has supported me over the years in successfully growing the business and who will continue to drive Watkin Jones forward for the long-term benefit of our shareholders."
The departure comes as the company saw profits soar and annual revenues top £300m in its first full year as a listed company.
Pre-tax profit at the student accommodation developer more than tripled to £43.3m (2016: £13.3m) in the 12 months to September 30, on revenues of £301.9m (2016: £267.0m).
The company listed in early 2016 and the absence of significant IPO costs this year led to the improvement in profitability.
Commenting on the latest results, outgoing CEO Watkin Jones said: "We are delighted to report another impressive set of final results demonstrating our ability to continue the strong momentum established during our first year on the AIM market.
"The group has generated strong revenue and earnings growth, driven by our core student accommodation development business."
The University of Birmingham has defended vice-chancellor Sir David Eastwood's £439,000 a year salary suggesting the university's performance had materially improved with students having high levels of satisfaction.
The salaries of university vice-chancellors have come under scrutiny and recently resulted in Bath's Prof Glynis Breakwell stepping down after it was revealed she was the highest paid vice-chancellor in the country.
The salaries of vice-chancellors have been reported by Times Higher Education magazine, with the average university boss earning £355,670 a year once employer pension contributions are added.
The University of Birmingham defended Mr Eastwood's salary saying: "Professor Sir David Eastwood is recognised within the higher education sector as a highly successful and experienced leader of a large, complex organisation with global reach.
"There is a global market for talented University leaders, with many Australian and North American universities paying significantly more than leading UK institutions: a reality which needs acknowledging if the UK wishes to retain its position as being second only to the US for its HE system.
"Under Sir David's leadership, it is widely recognised that the University's performance has improved markedly. Aspects of this rise include high levels of student satisfaction, Gold in the Teaching Excellence Framework, huge demand from applicants for our courses, the best QAA report in the sector, amongst the highest levels of graduate employment in the sector, growth in the value of research grants and quality of research and improved positions in the domestic league tables."
In wake of claims of excessive pay, the Committee of University Chairs has put together a voluntary code, promising to bring more transparency to the remuneration process.
LXi REIT Plc has announced the acquisition of a long-let student accommodation scheme in Dundee for £20.25 million, reflecting a net initial yield of 6.3%.
The property is fully let to Mears Group Plc. The lease covers a term of over 21.5 years, with no tenant break right, which expires in September 2039. The rent is reviewed annually in line with uncapped Consumer Price Index inflation but comes with a collar of 1% per annum.
The block of student accommodation consists of 413 beds and comprises 379 rooms within cluster flats of two to six beds, along with nine one-bed flats and 25 self-contained studios.
The property is located in the centre of Dundee and underwent a significant refurbishment in 2017.
The acquisition is being financed by the company's new 11.5-year loan facility secured from Scottish Widows in December 2017, at a fixed rate of 2.85% per annum.
LXi REIT Plc has deployed £263 million of equity and debt since its IPO in February 2017, with an average net initial yield of over 6%. The company has a diversified portfolio, with 97% of the income inflation-linked or with fixed-uplifts.
Commenting on the acquisition, Simon Lee, Partner of LXi REIT Advisors Limited, said: "We are pleased to have acquired the Dundee student scheme, which further diversifies the Company's sector exposure. The acquisition provides a long-term, index-linked income stream at an attractive net initial yield, underpinned by an excellent location in a leading university city and a strong underlying trading performance."
Leicester University is seeking to transform a Victorian building into a world-class business school.
The University of Leicester wants to convert its existing post graduate teaching centre in Brookfield House off London Road.
The plans are set to go before the council's planning committee in the coming weeks and planning officers have recommended the project be given permission.
A spokesman for the university said: "The school will gain an attractive and unique identity and focus for students and staff within the School of Business with the Victorian House at Brookfield as the memorable centre piece of the campus."
The plans call for the demolition of the mid-20th Century extensions to the Victorian property and constructing a new three storey extension and lecture theatre.
The university has suggested up to 750 students will use the new business school along with 210 members of staff.
The development is part of the university's wider £500 million project to improve its estates, including the renovation of the Percy Gee building and a redevelopment of Freemen's Common.
University bosses will no longer be expected to set their own salaries under a new fair-pay code announced in the wake of claims of excessive pay for vice-chancellors.
The voluntary code has been put together by the Committee of University Chairs, but the chief executive of the newly created Office for Students has already dubbed the code as "insufficient".
Former universities minister, Jo Johnson, had called for restraint and threatened the intervention of a new regulator.
University leaders have now produced a set of self-regulating rules, which promising more transparency and a commitment that "no-one can have any part in deciding their own remuneration".
The proposals are now out for consultation until March, with an emphasis on independence and expertise in the committees setting senior pay.
Universities will also be expected to report how senior pay relates to other staff, publishing the pay multiples between vice-chancellors' earnings and average salaries.
Commenting on the rules, chair of the Committee of University Chairs, Chris Sayers, said: "We need to keep senior post-holders' pay under review, and be able to justify our decisions.
"We must enshrine the values of transparency, fairness and accountability at the heart of our procedures to ensure we maintain the trust required for the long-term success of our world-leading sector."
A former pub in Norwich is to be transformed into student accommodation after laying empty for more than two years.
Last year, developers Estateducation submitted plans with Norwich City Council seeking permission to convert and extend the site into a 35-bed student development.
However, city planners rejected the plans, suggesting it was too close to woodland at the back of the site, and some of the rooms would have very low levels of daylight.
Subsequently, Estateducation came back to the table with a revised plan, with the number of beds being cut to 34.
Developers said the revision would provide increased levels of light to all rooms.
Despite the revision, concerns were raised that the developer was trying to fit too much on the site and consisted of an over-development. Meanwhile, others wanted to see the building reinstated as a pub, although just three bids were made for the site since 2016 and none from public house operators.
Members of the city council's planning committee granted the developers permission by nine votes to two.
Steel City in Sheffield has been granted planning permission for 346 beds and is located in close proximity to both the city's universities. Meanwhile, Hythe Mills in Colchester consists of a riverside development with a total of 223 beds.
Future Generation represents a joint venture between developer Southern Grove and Tadhamon Capital.
Since the company's launch, Future Generation has secured a supply pipeline of more than 1,000 beds, with a further 3,000 beds under contract. Over the next five years the company has set a target to deliver 10,000 beds.
Commenting on the deal, Ed Fisher, managing director of Future Generation, said: "Since launching earlier this year, we have hit the ground running and our in-house development team has sourced some great sites throughout the UK. We are fortunate to have secured a great partner in Maslow, who understands the fundamentals of the purpose-built student accommodation market and will enable us to deliver product quickly."
Mr Fisher added: "With our first two schemes now coming out of the ground, we can continue to focus on finding and delivering new sites to increase our footprint."
The international investment firm Arlington, which represents Saudi and Kuwaiti investors, has acquired the operating portfolio of Study Inn for £135 million.
The acquisition takes Arlington's student accommodation portfolio to over 10,000 beds and its total investment in the sector to more than £750 million.
The deal was partially funded by a 38-year bond and was fully subscribed by funds managed by Aberdeen Standard Investments, with the balance of the debt provided by MetLife.
The sites will maintain under the Study Inn brand, who will also continue to operate the assets.
Commenting on the acquisition, George Shweiry, founder and CEO, said: "We are pleased with the growth in our portfolio. Reaching this prized position has only been made possible by the trust and backing of our investment partners in the Middle East.
"Our most recent acquisition marks a big milestone for Arlington and provides us with increased momentum as we continue to grow into 2018."
Arlington recently acquired a £40.5 million portfolio of four student accommodation assets in Portsmouth and Southampton from Stelling & Co. Its other major holdings include 1,445 beds purchased from Spectrum Housing Association and Sanctuary Housing Association in March 2016, as well as 4,539 beds acquired from Opal Student Property Group in 2014.
Despite concerns that Newcastle could become saturated with purpose-built student accommodation, work has begun on constructing a 207-bed development at the former Tyne Tees site on City Road.
The development will consist of studio apartments as is due for completion at the end of 2019. The site will come equipped with a gym, games room, cinema, and a two-storey outhouse for social events.
Commenting on the build, Jerald Solid, business development and acquisitions director at Experience Invest, said: "There is a high demand for purpose-built student rooms in Newcastle, with 64.6 percent of students unable to access university or private sector student accommodation. This large undersupply of rooms led to an impressive four percent annual climb in student rents last year.
"The city's growing international student population is a prime market for high quality, purpose-built rooms."
The student property management company, Opto Living and property developer Opto Property Group are working together on the project, which is situated within 15 minutes' walk from Newcastle and Northumbria universities.
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