Onwards and upwards

It has been great to see the university graduation photos across LinkedIn and social media over the last few weeks. Joy for a job well done, and justified optimism for the future. Hoping not to detract from the endeavours of so many students, we feel the same here at 90 North, having recently closed our Academy Investment Fund of UK student accommodation, in association with Rasameel in Kuwait.

I can still just about remember my university finals, putting every last ounce of time and energy into achieving the best outcome. For while the press releases make it sound all too easy, those who have been involved with closing a fund will know the multitude of challenges, both anticipated and not, that hit you and for which overcoming them makes the success all the sweeter.

And for optimism for the future, I fall back on the demographic fundamentals and international dynamic of student accommodation in the UK. The number of young adults of university age is set to increase by 25% by 2030, compared with just 2% for EU countries. I would suggest that this alone should provide good reason to at least take a look at student accommodation as an investment strategy, but there is more.

The Universities and Colleges Admissions Service or UCAS, which operates the application process for universities in the UK, is projecting a 46% increase in applications from international students over the next five years. This is not some wildly optimistic judgment call, but a continuation of the trend. While China still dominates, its growth is starting to slow slightly, with India and other nations accelerating. And for the universities themselves, such international students paying full fees are a godsend to compensate for the domestic students for which they at best break even.

We are certainly not alone in favoring student accommodation as an investment strategy, with Tadhamon Capital having a very successful development program in the UK, and GFH, also from Bahrain, selecting the US and recently announcing a US$300 million portfolio acquisition with its local asset manager.

For while the world wrestles with inflation, interest rates, COVID-19 and conflicts, a multitude of students across the globe are dreaming of their graduation day and the future success they can build upon it. So, while the universities themselves take a well deserved summer break, we and many others will be pushing on with acquisition opportunities in this sector. Onwards and upwards.

Written by Philip Churchill, first published in Islamic Finance news Volume 19, Issue 29 dated 20th July 2022.