Brandeaux Student Housing, the £1 billion investment fund behind Liberty Housing, the student halls provider, suspended returning funds to investors last month due to ‘uncertainty’ in the market.
The fund manager blames too many student halls on the market with the collapse of the Opal Group and new student accommodation being completed for the upcoming academic year.
Now the question many are asking is has the student investment bubble burst for institutional investors who have poured billions into halls of residence in Britain’s university towns and cities.
Opal is at the root of the current concerns in the market. The firm and its subsidiaries managed a portfolio of around 20,000 rooms that is for sale, and until they work their way through the market, the value of student halls is being pushed down.
The other concern is who will buy the properties – student housing can easily shift into an aparthotel accommodation and even offices after a refit, so until someone strikes a deal, the Opal issue will hang over the market like a grey cloud threatening rain.
Nevertheless, student housing has outperformed most other investments over recent years, and shares in Unite Group, the largest UK student housing provider have risen almost 1,000% in four years.
With record investment last year, according to property consultants CBRE Group, the unspoken question is whether the sector has reached the balancing point where supply may exceed demand.
For investors that means will returns diminish?
Marcus Roberts, head of student investment at Savills, counters that interest in the sale of Opal’s properties is strong, indicating the market is not oversupplied.
The magic argument is student numbers have doubled in the past 10 years, but university and private halls can only house way less than half the number of students seeking housing.
