Alternative property deals are attracting more new investors
Health care facilities and student residential complexes bring higher returns and stable income, however some complications may arise
According to the Wall Street Journal the appetite for investing in alternative estates in Europe is growing, which is evident from the two upcoming deals for student housing in the UK totaling 1.4 billion pounds.
Barclays Capital PLC is about to sell its majority stake in the University Partnerships Program, which has 22 thousand student rooms, to the Dutch pension fund PGGM for 1 billion pounds. Meanwhile, the U.S. giant Blackstone Group LP is expected to sell its student flats ‘Nido’ in London to the Round Hill Capital for more than 400 million pounds. Both transactions will be completed next month, according to experts quoted by the newspaper.
Industry observers point out that international property investors are increasingly looking for opportunities to purchase student housing, healthcare facilities and hotels in Europe. While some investors are guided by the possibility of higher returns and more stable revenues, others just cannot find good enough deals in the traditional segments of the estate business because of the shortage of quality supply.
According to experts this new alternative segment of real estate offers a stable long-term income to investors as well as a lease for a period of 15-25 years. At the same time, such facilities are almost fully booked at all times, so there is a high demand and low rate of non-payment of rent.
Investments in health properties are expected to grow to 500 million pounds this year compared to the 300 million in 2011. The inflow of investments in the student housing market is even more astonishing and is expected to exceed 2 billion pounds in 2012 compared to the 950.6 million from last year. Since the beginning of 2012 were concluded 11 transactions for total of 337.4 million pounds.
Such niche assets, however, carry some complications. To find a suitable place for hospitals, hotels or student dormitories, especially at an affordable price, is not an easy task.
In Britain, for example, because of the restrictive regime for urban planning, construction or remodeling of already existing structures is difficult, and major new projects usually are usually rebuffed. Private initiative in student accommodation is also limited almost everywhere in Europe, as few builders would engage in such specific projects.
