Rush of transactions expected as investors seek PBSA assets

Michael Neuman, Vice-President Investments, Ivanhoe Cambridge

There will be a rush of transactions towards the end of the year as investors scramble to increase their exposure to PBSA, experts agreed  at Real Asset Media’s Student Housing in post-pandemic times briefing, which took place online recently.

“There is a lot of pent-up demand and there will be a battle to acquire the good assets,” said Michael Neuman, vice-president investments, Ivanhoé Cambridge. “Covid has held back banks and investors, but by September/October the potential could be unleashed,”

Lenders and investors will be reassured by the high number of reservations for the next academic year and by the fact that there is still a lack of product in most markets, so prices are likely to rise.

“There were some lingering doubts at the start of the year, but the doubts have gone and there is a feeling the sector is resilient,” said Stewart Moore, CEO, CRM Students. “We won’t be able to take a holiday in Q4 this year because a lot of transactions will take place. Investors are waiting to see what happens so after September there will be a lot of activity.”

The pandemic has strengthened the conviction among investors that “in the end, a living product is a safe product”, he said.

“We have more work because there is more interest in the sector”, said Samuel Vetrak, CEO, Bonard. “There’s more capital available as people realise how well the sector has performed. The doubts are fading away and there is more confidence in the asset class. We see reallocation on the parts of investors, and institutions moving into value add and developments.”

Despite the levels that yields have reached, there is strong demand for Germany, he said, with €4 billion ready to be invested in the country as soon as the opportunity arises.

Investing in Germany makes perfect sense, said Allsopp: “Rents are affordable, the provision rate is still very low and the market is potentially huge.”

A snap poll conducted among delegates at the briefing showed that 75% of respondents believe that transactions in the sector will increase or significantly increase and only 7% think they are likely to decrease.

“Last year investors put their plans on hold to see how things would pan out, but now they feel very re-assured”, said Nigel Allsopp, senior director, investment strategy and research, Greystar. “We see more people coming into the sector, including new entrants, so there will be more competition in the market.”