UK student housing investors bet big amid pandemic

“University application rates can sometimes increase in a challenging economic environment,” said Blackstone’s European real estate head

National Weekend Edition /
Apr.April 04, 2021 02:00 PM
Blackstone Group's Head of Real Estate Europe, James Seppala, believes university applications could increase. (Getty, Blackstone)
Blackstone Group’s Head of Real Estate Europe, James Seppala, believes university applications could increase. (Getty, Blackstone)

Investors betting big on the United Kingdom student housing market are hopeful the fall will mean back to school and back to business.

Many university students plan to return to campus at summer’s end, which means more demand for nearby student housing. For the most part, investors don’t believe the pandemic will severely impact enrollment in the mid- to long-term, according to the Wall Street Journal.

“University application rates can sometimes increase in a challenging economic environment,” said James Seppala, head of Blackstone Group’s real estate group in Europe. “We also saw this during the global financial crisis.”

Blackstone is one of the largest investors in student housing and made a big play last year, paying around $6 billion for the iQ company and its portfolio of properties in U.K. cities. That deal alone was bigger than all of the investment deals in the sector that closed in 2016, 2017, and 2019, according to the report.

Greystar is also bullish on the sector. Earlier this year, the firm announced a 291 million pound — $400 million — deal for 2,000 beds across five buildings in four cities. That more than doubled its total investment in the sector since 2013. The firm’s London properties are about 70 percent occupied, down from the typical 95 percent occupancy, but not nearly as bad as the hotel sector, for example.

The student housing sector has room to grow. Only about 20-30 percent of U.K. students live in purpose-built housing while in the U.S., around 50-60 percent of state-school students live in such housing, figures show.

The pandemic hit the U.S. student housing sector and universities particularly hard. Around 30 percent of public and private universities were running deficits as of the fall. Some even partnered with private developers to convert their student housing properties into high-end apartments.

[WSJ] — Dennis Lynch 


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