Hines has launched a new student accommodation brand and created a company to manage its £500m of UK and Irish assets in the sector.
Aparto will oversee the running of the investor’s 12 assets that, once built out, will total more than 3,700 beds.
Hines has made three new acquisitions to bolster its portfolio. It has bought the 205-bed Montrose on Stillorgan Road in Dublin, next to University College, from Ziggurat for €37.7m (£32m) as well as two development projects in Lancaster and Exeter, Devon, which will together total 882 beds. They are due to be completed in time for the 2019 academic year.
The Aparto team will be headquartered in Hines’ London office and the company will directly employ on-site staff at its schemes rather than outsourcing.
Hines made its debut in the student market last April when it entered into a £150m joint venture with McLaren Property to fund sites in Cambridge, Kingston, Aberdeen, Oxford and two in Brighton.
According to Alex Knapp, managing director of Hines UK, who is leading the company’s drive into the student sector, its ability to invest at all stages of the development process gives it an advantage in building its portfolio in a competitive market.
“The deals we have secured have not been widely marketed and have been off market or quasi off market,” he said.
“We have the ability to buy not just stabilised, standing assets but assets under development, sites and unconsented land. We can process those risks in a way others perhaps struggle to do so.”
The company’s funding is understood to come from a group of German pension funds, which invest predominantly in development assets, and Hines Global REIT, which buys income-generating assets.
With a dramatic surge of investment and development in the student accommodation sector over the past five years, some cities are now in danger of oversupply, but Knapp says that focusing on conurbations with a depth of student demand and providing affordable accommodation means investors can still be successful.
“The market is reaching saturation in some large northern cities and in Scotland and what we are also finding is there is a limit on budget and problems with the higher end, studios rather than clusters, particularly those in excess of £175 or £180 per week,” he said.
“Developers get excited when they see those numbers as they make their appraisals look good, but the number that can really pay that is limited.
“We are very mindful of that dynamic but in places such as Oxford, Cambridge and Brighton there is no danger of oversupply due to planning and availability being so tight.”
As well as the UK and Ireland Hines is also examining opportunities in continental Europe and is in the process of determining which countries are likely to provide the most opportunity.
