Mapletree Buys UK Student Housing Properties for £96M

The common room at Mapletree’s Callice Court student accommodation in Coventry

Mapletree Investments has completed the acquisition of a pair of purpose built student housing properties in the UK, as the Temasek unit strengthens its portfolio of university digs in the Brexit-challenged nation.

The Singapore-headquartered investor and developer is paying the UK’s largest provider of student accommodation, Unite Students, £96 million ($117 million) for the assets.

The acquisition comes less than a year after Mapletree, which has global real estate assets under management of S$56 billion ($41 billion), added a 224-bed property in Norwich to its UK student housing portfolio and just over two years after the company splurged S$1.6 billion on a set of eight student dorms in North America.

Mapletree is now the third Singapore government-backed entity to invest in assets owned by Unite Students, following Singapore Press Holdings’ S$321 million purchase of 14 properties from the Bristol-based firm just over a year ago, and GIC’s commitment of £227 million to a joint venture with Unite Students to at Aston University in Birmingham.

Pursuing a Recession-Proof Sector

“Mapletree is optimistic about the relatively recession-proof and anti-cyclical nature of the student accommodation sector,” a Mapletree spokesperson told Mingtiandi. “We will continue building up our student accommodation portfolios in the United Kingdom and the United States as well as explore opportunities in other markets.”

The acquisition of the pair of properties, which are located in the central England city of Coventry, brings Mapletree’s portfolio of student accommodation in the UK to 30 properties across 15 cities.

Mapletree chairman Edmund Cheng has learned his way around Coventry

Globally, the Temasek unit now has 50 properties in the asset class with over 22,000 beds across 33 cities in the UK, US and Canada.

The chief executive of Unite Students, Richard Smith, said that the sale was in line with the book price of the assets and that the disposal supported its ongoing strategy of recycling assets at a rate of £200 million per annum over the next three years.

Aligning with the UK’s 5th Largest University

Mapletree’s pair of properties allow the Singaporean firm to add a total of 1,127 beds in Coventry, which as home to the UK’s fifth largest university, is benefiting from a boom in student enrollments. The smaller of the two assets, Millennium View, is two years old and contains 391 en-suite study bedrooms. The other project, 736-bed Callice Court, opened in 2014.

Rent for en-suite rooms in the properties is between £153 and £164 per week, on a 43-week contract, which covers all utilities, insurance and a living room with a pool table.

Last year, Unite Students reported that occupancy was at 99 percent across its £2.3 billion portfolio of halls of residence in the UK. Typical yield for student accommodation in the UK’s prime regional cities such as Coventry is around 5.5 percent, according to JLL.

In line with institutions of higher learning across the country, Coventry University has seen its student population escalate in recent years. 34,125 students enrolled at the university last year, a rise of over seven percent from 31,690 the year before.

With numbers bolstered by increasing interest from overseas applicants, the UK government expects international students to increase from 460,000 to 600,000 by 2030.

22% Drop in Investment

Despite the healthy student numbers, Mapletree is making its acquisition as investment in UK student housing declined 22 percent last year to £3.2 million — down from £4.1 million in 2017.

“The current political and economic uncertainties in the UK have led to a degree of caution across all sectors and student housing cannot be totally immune,” JLL said in its second quarter report on UK student housing, while noting that the sector is increasingly perceived as a defensive, alternative asset class with some contra-cyclical characteristics.

The property consultant said that there had been up to £960 million in transactions up to June this year and estimated a full-year volume of £2.9 billion, with investors holding back on decision-making until there is further clarity on Brexit.