GIC has made its third major student housing investment of 2017 as the Singaporean sovereign wealth fund is said to have agreed to pay A$400 million ($302 million) to purchase a pair of Sydney student blocks from Frasers Property Australia and Japan’s Sekisui House.
The Singaporean mega-investor is buying a total of 1,043 beds for a Sydney record A$400,000 ($302,000) per bed, according to an account in IPE Real Estate, citing sources familiar with the transaction.
With this Aussie deal GIC has now been involved in more than more than $2.1 billion in student housing investments in 2017, and over $3 billion in such deals across the UK, Europe, North America, and now Australia, over the last year.
Adding to GIC’s Australian Portfolio
The sovereign wealth fund’s new Aussie assets are located in the master-planned Central Park development in the southern Sydney suburb of Chippendale. The local affiliate of the Singaporean development and investment firm also last week announced that it had entered into an agreement to provide a provide a A$190 million purchase option on a hotel and commercial space in Central Park to a local Australian firm.
Frasers and Sekisui House had put the student housing assets, which are near the University of Technology Sydney, the University of Sydney and the city’s Notre Dame University, on the market last year. GIC is said to be planning to manage its new acquisition through Iglu, a company the sovereign wealth fund acquired for A$150 million through a 2014 joint venture with Macquarie Capital when it made its first foray into Australia’s student housing market.
GIC’s Student Housing Spree Continues
This deal makes the third major GIC deal for student housing so far this year. In March the Singaporean sovereign wealth fund partnered with Canada’s largest pension fund manager (CPPIB) to expand on its year-old Scion Student Communities joint venture with a $1.6 billion deal of 29 assets.
Prior to that US deal, in February GIC acquired its third European student housing project in five months as the sovereign wealth fund agreed to invest in a £227 million ($283.5 million) joint deal between GIC and the Bristol-based Unite Students for a complex at Aston University in Birmingham, England. With that buy GIC’s joint venture snatched up 3,067 beds across five detached buildings.
Preceding those deals was the sovereign fund’s late 2016 purchase of more UK student housing, this time with Dubai-based Global Student Accommodation Group (GSA), an estimated $900 million deal.
Singapore Turns to Stability of Student Housing
According to Real Capital Analytics data cited by Bloomberg, GIC and Mapletree Investments are at the forefront of Singapore’s love affair with student housing. the world saw a record $16.2 billion of student-housing acquisitions in 2016 and a further $3.3 billion of deals in the first quarter of 2017. Investors from Asia accounted for 21 percent of student housing transactions around the world last year, jumping from 1 percent in 2015.
With this new buy, GIC adds to the $2.84 billion in student housing assets recorded from January 2016 to March 2017. Following far behind is Singapore’s Mapletree with $1.28 billion over the same period; Mapletree’s Global Student Accommodation Private Trust raised $535 million last month and has more than 14,000 beds in 22 cities across the US and UK.
Sydney, Central Park Ripe for Student Housing Bump
The purpose built student accommodation market in Australia is relatively immature compared to competing markets, according to a Knight Frank report last year. From 2016 to 2020 the report claims that 29,311 student beds have the potential to become operational.
Part of what makes student housing attractive to overseas funds – aside from the fact that it can have higher yields than either residential or commercial – is the relatively prime locations and consistent demand. While the new buy from GIC isn’t exactly in downtown Sydney, it is in a prime cultural area of the ‘hipster suburbs,’ which are increasing in value. Over the past five years the median house price in Chippendale has risen to more than $500,000.