Weak Pound Fuels Rich Foreign Investors’ Rush To Buy Student Flats

Student numbers may be declining but foreign investors are lining up to buy Plymouth’s student flats with one block already being snapped up by a Middle Eastern consortium in a multi-million pound deal.

The Coombestone House block, in Hastings Street, was bought by Qatari investors, according to industry insiders, earlier this year and other investors from the oil-rich nation are investigating opportunities in the city.

Meanwhile a company from Singapore paid £180million for five huge Plymouth student apartment blocks which were offloaded by Unite.

And two other blocks are said to have been gobbled up for “more than £1million” according to industry sources.

Other properties are owned by businesses from Malaysia and South Africa, among others, and delegations from Kuwait, Israel, Spain and China are sniffing around the city.

Nationally wealth funds and investors are snaffling property left, right and centre, despite Brexit uncertainty and global trade wars.

But the reason for this activity is likely to be Brexit related – a huge decline in asset prices since the referendum vote.

Sterling devaluation has made properties throughout the UK, including Plymouth, an attractive proposition.

Henry Hutchins, chief executive of Clever Student Lets, the South West’s biggest student lettings firm, said properties are now changing hands at a 20% discount on a few years ago.

Qatar is leading the way, having invested £3billion in the UK, and plans to splash another £2billion.

Mr Hutchins said the Qataris nabbed Coombestone, a four-storey, 60-bedroom block, for “a few million”.

Plymouth-based Clever Student Lets, the largest single office student accommodation firm in the UK, advises investors looking to put cash into bricks and mortar, whether new builds or older converted properties, and is involved in brokering deals.

“We are seeing hardly any investment from UK companies,” Mr Hutchins said. “But we are seeing serious interest from Kuwait and Qatar, and others in the mid east. Every deal we have at the moment is foreign.”

Mr Hutchins said his firm had been in talks with companies from Spain, Hong Kong and Israel in 2019, and clients from Malaysia had been scouring the city for opportunities.

He added: “We advise and broker deals, they come to see what is available. The Qataris are still looking.”

He said potential investors include high-wealth individuals, companies, pension funds and bankers and said: “It’s surprising. We get inquiries from national banks down.

“They don’t think short term, it’s all-term investment.

Mr Hutchins said the investors were looking at buildings already in place and those yet to be built and said property is available at a “22% to 23% discount” because of weakened sterling.

The pound was worth US$1.50 just before the 2016 referendum and in July 2019 dipped to as low as US$1.24.

But it has fallen more against the euro, a 14% drop since the vote, and hit a six-month low of 1.105 euros in July 2019 after Tory leadership candidates Boris Johnson and Jeremy Hunt both said a no-deal Brexit was possible.

Mr Hutchins said: “For three years we have had a golden opportunity to sell goods and services because of the week pound.

Mr Hutchins also said foreign interest in Plymouth properties is a good thing because most investors set up UK firms to handle their affairs in this country and pay their full tax bill.

He said the market for student properties in Plymouth is “buoyant” with properties in and near the city centre maintaining their price or even going up in value.

He said even the opening of the huge Beckley Point skyscraper, in 2018, had not had the major effect that was expected.

And the high-spec Aspire block in Mayflower Street has had no trouble attracting tenants.

But those of the periphery of the student area, purpose built flats and converted houses on the outer edge of areas such as Peverell, Mutley Plain and St Judes, have seen values going “sideways”.

He explained that declining student numbers are also a concern leading to “a major oversupply” of student properties, with some converted student houses being turned back into flats for non-students.

The other main trend is for students to want smaller properties, houses with one to five, or even one to three, bedrooms, rather than larger properties.

Article from Business Live