Singapore’s Far East Orchard Reaches $93M First Close of UK Student Housing Fund

Singapore’s Far East Orchard has launched its maiden private fund focused on purpose-built student accommodation in Britain with commitments totalling £70 million ($92.5 million) at first closing.

Known as FE UK Student Accommodation Development Fund, the vehicle is targeting an aggregate commitment of £100 million, said the SGX-listed investment unit of regional builder Far East Organization. The fund’s seed asset is a development site in Glasgow acquired by the company in March.

Far East Orchard CEO Alan Tang said the inaugural fund marks a key cornerstone for the company as it builds a lodging platform leveraging on its investment and asset management capabilities.

“Having been in the UK PBSA business since 2015, we have established a track record in the market and remain confident in the sector given its strong fundamentals, robust student demand, and structural supply-demand gap,” Tang said in a release.

More Beds Needed

The company’s wholly owned Far East Orchard Investments unit committed £35 million towards the £70 million first closing. No other limited partners were identified.

The fund will target high-potential PBSA development projects throughout the United Kingdom,  where there exists a current shortfall of 580,000 student beds, according to a CBRE report cited by Far East Orchard. The company reported reservations of 92 percent across its 3,700-bed UK portfolio for the coming academic year, reflecting “strong continued demand” for student housing.

Far East Orchard expanded its portfolio into Scotland with the £38.9 million development joint venture in Glasgow announced in March. The company is teaming up with Singaporean construction firm Woh Hup Holdings to develop a 273-bed facility in the Merchant City area, southeast corner of Glasgow city centre.

The project, to be completed in 2026, marks Far East Orchard’s 15th UK development as it looks to plug the student housing gap in a city home to one of the world’s top 100 universities and where the ratio of students to available beds reached 2.4:1 last year.

Far East Orchard and Woh Hup acquired the Glasgow site from local real estate firm Nova Osbourne for £3 million, with Far East Orchard owning an 85 percent interest in the JV while Woh Hup holds 15 percent stake and Nova serves as the development manager for the project.

Educational institutions including University of Strathclyde and Glasgow Caledonian University are about one mile (1.6 kilometres) north of the site, while it takes a 15-minute drive to reach the University of Glasgow.

Asset-Light Future

Far East Orchard and Woh Hup had teamed up with Singapore family office Way Assets in 2022 to invest in a £26.6 million PBSA project in Bristol. That 690-bed project, close to a satellite campus of the University of Bristol, is expected to be completed in 2026.

Once built, Far East Orchard’s two latest projects will bring the PBSA portfolio to 4,700 beds across 15 locations in the UK, including three existing properties in Bristol: the 301-bed King Square Studios it bought from LaSalle in 2020, as well as the 166-bed St Lawrence House and Harbour Court, a 133-bed facility it acquired as part of a £55 million deal in 2019.

In April, Far East Orchard announced the acquisition of a 49 percent stake in Homes For Students, Britain’s largest independent PBSA operator.

“Moving into the fee-based investment management business is a natural progression in addition to our current operating fee-based model to leverage our investment and asset management capabilities in the PBSA business in the UK,” Tang said. “It allows the group to grow its recurring income stream as it steers towards an asset-light business model, ultimately reducing its balance sheet exposure and delivering greater sustainable value to shareholders.”