Gaw Capital Dreams Up Hybrid Investor/Student Visa to Fuel $1.2B UK Real Estate Fund

Student visas have become a common way for Chinese to head overseas for decades. And thanks to schemes like the US’ EB-5 plan, investor visas are sending tens of thousands more across China’s borders each year.

The folks at Gaw Capital Partners seem to have come up with their own new way to head overseas, however, creating an “Education Bond” to allow wealthy Chinese who study in the UK an opportunity to gain permanent residency.

There are already an estimated 70,000 Chinese enrolled in UK schools and Gaw Capital, together with London-based advisors InvestUK, aim to raise £1 billion ($1.2 billion) from students from China, and other locations, who can afford a minimum subscription price of £2 million ($2.5 million). The bond would allow students to study in the UK on a Tier 1 investor visa, previously only available to those who invested in UK-based companies or government bonds.

With the UK facing a notable housing shortage, at least half the funds raised via the bond are slated to be invested in high-yield real estate debt. The yield from these investments would be used to fund the student’s tuition fees. After UK builders completed less than half of the number of needed homes needed by the market between 2004 and 2014, the UK is in need of additional homes, and some of the funds from the bond are earmarked for affordable housing.

“The Education Bond is an innovative solution that addresses both the need to fund UK affordable housing, while continuing to attract world-class talent to the UK’s world-leading universities. It also provides a meaningful yield for the bondholder,” Rupert Gather, chairman of InvestUK, said.

Gaw’s London Interests Take A New Twist

While Gaw’s latest move is a bit different than some of their previous plays in the market, which normally involve London office buildings, the firm continues to be active in the UK. Founded in 2015, Gaw’s UK arm had more than $ 3 billion in assets under management as of the end of last year.

The Hong Kong-based firm led the purchase of a 44,600 square metre (480,000 square foot) London office complex for £500 million ($775 million) together with a group of Asian investors. The building boasted a number of well-known tenants including Google and Sky Media.

Gaw teamed up with mainland insurer Ping An helping broker the deal for the Lloyd’s of London building in London’s financial district for ₤260 million ($402 million) in 2013. The two firms joined forces again in 2015 on the ₤327 million ($506 million) acquisition of Tower Place in London.

All Eyes On UK Housing Sector

While details of just how much of the bond will go towards affordable housing have not been revealed, Bloomberg reported a portion of the money from the Education Bond will be used to fund new pre-fabricated homes in select UK cities. Gaw and InvestUK revealed two initial projects are already under negotiation.

The UK government continues to seek ways to alleviate a housing shortage. One recently announced measure was a plan to deliver one million new homes by 2020 via a £5 billion ($6.1 billion) housing fund. This comes at a time when developers in the UK have been accused of deliberately restricting the supply of new houses in order to keep prices high.

China’s second largest developer has also taken note of the housing shortage in the UK and could soon be contributing to the housing efforts. China Evergrande was reportedly weighing up an acquisition of the UK homebuilder Cala Homes in a £700 million ($856 million) deal.