Student housing is a âbig Living investment storyâ, says JLL
With the number of full-time students in the UK continuing to grow, student housing is now the number one Living investment, reflected by a sharp rise in the volume of high-value deals secured across the country over the past 12 months.
Investors flocked to Living sectors last year with the industry accounting for more than a fifth – 22% – of all investment, according to JLL.
The first quarterly UK Living Capital Market report by JLL reveals that the multifamily sector is the UK’s fastest-growing property industry, with £5.2bn worth of transactions making it the second-largest market in Europe.
Total transaction figures in the student housing sector dropped by 33% in 2019 compared to the year before, but confidence in the market was bolstered by two key deals: the Unite acquisition of Liberty Living for £2.2bn, and the potential IPO sale of iQ, with an expected price of in excess of £4bn.
In light of the general election result, investor sentiment has improved which is anticipated to lead to increased activity in the sector with the potential for transaction values to exceed £7.5bn transactions in the next 12 months.
The growth of the multifamily market in 2019 was catalysed by forward funding, accounting for 89% of all deals compared to 77% in 2018.
However, reports indicating a slowing pipeline of deals and developments suggest that the market may be limited in the first half of 2020, despite an expected increase in capital allocations to the sector.
The UK coliving sector is the largest in Europe, spurred by student housing developers entering the market and opening their brands to young professionals in the wider private rented sector.
With an estimated 16,000 beds either operational or in the pipeline across the UK, the future success of these developments and the coliving market will be shaped by Local Authorities and regulatory permissions.
Simon Scott, lead director of UK Living Capital Markets at JLL, said: “Student housing is the big Living investment story of 2019, and with some significant new opportunities about to break into the market, we don’t expect a slowdown any time soon.
“The success of this sector adds to the particular attention already being received by the multifamily and coliving markets, and helps to reassert the importance and value of the UK’s Living market on the European investment stage.
“Overall, the £11.2bn Living investment in 2019 accounted for 22% of all real estate investment.
“With the fog of political uncertainty starting to clear, we are looking forward to Living getting even bigger in 2020.”
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