MIPIM UK 2015: Investment in student housing over the past year reflects high demand and stable returns, but future opportunities lie in development, a panel of expert has concluded.
However, developers need to use caution, because land values are increasing. And a prominent operating platform is key to success, the panel said today at MIPIM UK in London.
Mark Bladon, a student property finance specialist at Investec, said: “One of the main issues is that there are a lot of players and not enough land.
“This will push up land values, as well as construction costs, and the high rents developers will have to achieve will make it harder.”
Paul Tebbit, director at Blackrock, said: “I think we have to be cautious. I think there is still value but now if you are picking up individual assets we have to be wary about the supply response, and therefore be discerning about where you develop and why.”
But it is not just development expertise that is needed to succeed in what has become one of the most competitive UK markets. A strong operating platform and business model is also essential.
Nick Collins, partner at Nebarro, said: “This is not just bricks and mortar. Entities are investing in a brand and an operating platform in this sector and the big players that have been around are very talented individuals in a complex and challenging market.”
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