REAL ESTATE – THE OLDEST BUSINESS IN THE WORLD, PROBABLY.
There are other industries that could rightly claim this title, but from an investor perspective, many would
regard Real Estate as the World’s oldest business. For centuries or longer, landlords have purchased
properties and rented them out to tenants.
The appeal, of course, is income and capital growth which are probably the twin pillars of any investment
strategy. Buying an asset today at a value that will usually rise, while receiving a similarly increasing
income, has unmistakable appeal.
However, not all Real Estate sectors have such built-in certainty. Changing usage patterns, economic and
political factors (and even pandemics) can all turn “whizz-kids” into “wuzz-kids”, as a number of developers
have recently found. That is why it may make sense to look carefully at economic and political factors,
market trends and sentiment before stepping into a Real Estate purchase.
Introducing Purpose-Built Student Accommodation.
Portreath Partners have been working in Purpose-Built Student Accommodation (PBSA) for more than
fourteen years. Over that time, and for years before our involvement, PBSA has shown itself to be a solid
and profitable investment relying on growing demand and continuing significant undersupply.
The “bump in the road” that was the Covid-19 pandemic, caused jitters and a drop in transaction numbers
but PBSA has continued its upward trajectory more resolutely than some other sectors.
Looking ahead, the continuing supply/demand balance looks to continue – development fulfilment has
been restricted due to planning issues, high construction costs and lack of available land. Students will
continue to struggle to access PBSA as an accommodation option leading to high demand and growing
rents.
For the UK market, the recent Q4 2023 report by independent consultants, Knight Frank, paints a picture of
the difficulties new applicants will face in finding a convenient, well-appointed student apartment with the
benefits that only a PBSA rental can provide. See the figure below to see the extent of projected
undersupply, even at this stage in the UK’s maturity.
And Further Afield
The UK market, and the US for that matter, are mature markets that continue to appeal to investors for
their track record and liquidity. Entrance to both requires considerable research but this is where
Portreath’s expertise comes into play. Our contacts with developers, operators and independent
consultants include some of the most active market players.
What’s more, we have several partners active in Europe. While these markets are less-developed than the
UK and US, Western Europe boasts some significant activity with Germany, Spain, Italy, France and
Portugal as stand-out locations.
In Savill’s November 2023 report, European PBSA Investment Barometer, their research suggests that over
the next few years, some €12.3bn is expected to be deployed in the creation of over 93,000 new beds.
Meanwhile, Savill’s earlier report, the European Living Investor Survey suggested that PBSA was the
second-most popular sector amongst investors. (Only multifamily featured higher which augurs well for
another of our Real Estate specialities, Buy to Rent).
Elsewhere in Europe, considerable interest is building in Central and Eastern European markets where
certain countries have seen significant growth in their economies. Rising numbers of Higher Education
students across the region are seeking accommodation of a standard their Western counterparts have long
come to expect.
Whilst considerably less mature and having correspondingly lower liquidity, easterly markets have
particular appeal to some investors seeking a more adventurous and potentially rewarding journey.
So, if PBSA sounds of interest, contact Portreath Partners to discuss how we can help you to source the very best opportunities. Whatever your requirements or aspirations, make Portreath your first port of call.