If you were worried about the impact of Brexit on the UK’s £51.2bn purpose built student accommodation and £9.6bn Build-to-Rent markets, then don’t be. The country’s largest PBSA operator Unite, reported last week that the industry’s outlook was ”positive”, whilst institutional capital continues to flood into BtR. So much so, that real-estate adviser Savills expects the latter to ultimately be worth £543.6bn, covering 1.749m homes compared to 30.4k today.
Similarly, quality developers like Watkin Jones are enjoying healthy demand, despite the more uncertain economic climate. The group saying this morning that not only were all 6 of its FY19 PBSA schemes on track for completion by September, but it had also:
- Exchanged contracts (worth £19.6m) on a 197 unit student site in Canterbury with Europa Generation (completion by Sept’21).
- Forward funded its 245 unit PBSA scheme in Swansea with Brookfield (Sept’21).
- Secured a new prime site in Exeter for up to 170 student beds (Sept’23).
- Been granted planning permission for a 12 storey, 462 bed PBSA scheme in Leicester (Sept’22).
- Obtained planning consent on an adjacent BtR site in Leicester for 184 apartments (delivery FY21), and signed contracts on a further 186 unit project with section 106 authorisation in Brighton (FY22).
Better still, the buoyant pipeline provides multi-year visibility for investors, with the stock trading at a modest 13x PER (see below), whilst paying a hefty 3.9% dividend yield.