Sunway RE Capital Buys UK Student Housing Asset to Bring Portfolio to $90M

Fund manager Sunway RE Capital has acquired a student housing property in southern England, adding to a burst of recent acquisitions in the asset class by Singapore-based investors in the UK.

The real estate platform controlled by Malaysia’s Sunway Group bought Green Wood Court, a 233-bed property in Southampton, through Sunway Residence Trust II. The sponsored private trust invests principally in purpose-built student accommodation assets serving Britain’s Russell Group universities.

No deal value was disclosed, but Sunway RE Capital said the transaction increased its portfolio to five PBSA assets with over 800 beds across key cities, representing £75 million ($90.6 million) in assets under management.

“Building on this momentum and the strength of Sunway’s track record and competencies, we aim to accelerate our efforts to scale up our platform to acquire additional yield-accretive student accommodations in the UK, grow our AUM and extend our track record,” Sunway RE Capital CEO Tan Kok Heng said Monday in a release.

Value-Add Opportunity

Located a few minutes’ walk from the University of Southampton’s Highfield and Bolderwood campuses, the freehold Green Wood Court achieved a 100 percent occupancy rate for the 2022-23 academic year.

The property was extensively refurbished with new carpets, bathrooms, showers, furniture and fittings in 2018, and further opportunities exist for asset enhancement initiatives such as the addition of new units, Sunway RE Capital said.

Ciaran Londra, a Singapore-based partner at Bryan Cave Leighton Paisner, said the UK continues to offer a safe haven for global investors despite recent political difficulties.

“The market is still in favour of those who don’t need debt,” said Londra, who assists Asia-based clients with outbound real estate investment in Europe. “So private family offices and some REITs still have a great opportunity to enter the market whereas in years gone by they were priced out.”

Buying Spree Continues

Sunway’s latest acquisition comes two months after Singaporean giant City Developments Ltd added 1,863 beds to its UK student housing portfolio with the purchase of five properties in Birmingham, Canterbury, Coventry, Leeds and Southampton for £215 million. The deal followed the £59.2 million June acquisition of the group’s first purpose-built student accommodation, the 505-bed Infinity in the English city of Coventry, from investment manager Erec Estates.

Also in December, Far East Orchard revealed its acquisition of a freehold student housing property in Southampton for £13.9 million, coming six months after the developer set up a £26.6 million joint venture with two fellow Singapore-based investors to build a student housing project in Bristol.

Chris Pilgrim, managing director of Colliers’ Asia Pacific capital markets business, pointed to a supply-demand imbalance for institutional-grade managed student accommodation in Britain — particularly around the Russell Group universities, an association of 24 highly ranked public schools — making it a sector of choice for overseas real estate investors.

“Southeast Asian institutional investors have continued to dominate the UK student housing real estate asset class,” Pilgrim said.