The company, which has run the Coral Student Portfolio since 2009, said the “accommodation model” of student property at universities across the UK will see a continuing global pickup over 2015 as more universities open internationally.
“We will be closely monitoring these developments,” it said. “Our focus will be on established providers with a demonstrable track record in key international centres.”
Chief executive John Kennedy added that previous fund closures in the sector, such as that of the Brandeaux Student Accomodation Fund which was closed after it failed to meet investor redemption demands, represent a “structural rather than sector” failure.
Globally, the number of students seeking a university education is set to reach 263 million in 2025 from 176 million in 2015.
In particular, the number of students outside the UK has grown, with 30,000 students across 20 universities in Dubai, 420,000 across Sydney and Melbourne, 25,000 in Cape Town, and two million across Beijing and Mumbai.
Potential benefits
Kennedy said international centres have recognised the potential economic benefits of housing students, and are now aiming to offer additional accomodation for local students.
“The reasons student accommodation was embraced as an asset class by the investing public 15 years ago are as relevant now as they were then,” he said. “In fact they are even more compelling now the sector has matured and evolved in the UK and presents fresh opportunities globally.”
The UK currently hosts the second highest number of international students behind the US, followed by Australia, France, Germany, and the Russian Federation, which Coral says benefitted from a pickup in globally mobile students.
It added that students are increasingly moving away from university-supplied accommodation into the private purpose built accommodation offered by the sector.
Other benefits listed by the company include an “unusual supply/demand imbalance” compared to other markets, a resilience to wider economic issues, a broad spread of providers and product types, rent increases each year, and an under supplied market created by continuous growth in the number of university applicants/.Kennedy said this growth can already be seen through the creation of the Knight Frank Student Accommodation Index and developing sovereign wealth and institutional activity.
Changes
The Coral Student Portfolio was launched in March 2009 as an open ended collective investment scheme. It has a redemption penalty until the sixth year of investment, and an annual management fee of 1.5% a year.
It is AIFMD authorised, Luxembourg-regulated and has had an annualised performance of 8.26% over five years.
In May last year, founder and executive chairman of the Global Student Accommodation, Nick Porter, bought a 50% stake in Coral with the aim of growing its assets under management to $1bn within the next five years.
At the time, Porter said: “The combination of an undersupplied market, high occupancy levels and stable income yields has made student accommodation attractive to investors looking for resilient capital and rental growth.”
Last month, Coral said it was keen to acquire the assets of Mansion Group’s Student Accommodation Fund.
Mansion’s fund closed to redemptions in October 2013. It had been forced to close when oversupply concerns in the student accommodation market triggered problems with market liquidity and pressure from investors to redeem their investments.
