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Far East Orchard moves into student housing with acquisition of UK properties
Far East Orchard has acquired a portfolio of student accommodation properties within Shieldfield, Newcastle upon Tyne, England for £40.9 million (S$83 million) to extend and diversify the reach of its overseas property portfolio in Europe.
The freehold properties comprise two land sites for development into purpose-built student accommodation, an existing student accommodation, and another student accommodation undergoing development which is expected to be completed in the second half of this year.
"This move represents several milestones to develop our position as a leading regional real estate player," said FE Orchard group chief executive and managing director Lui Chong Chee in a statement.
It marks an expansion of the firm's property development beyond Singapore into Europe and an extension of development capabilities into the student housing sector in the UK.
"As the UK student accommodation market has been structurally undersupplied, we plan to contribute and provide high quality purpose built student housing. In addition, this new asset class opens a door to stable capital growth in one of Europe's major property markets," said Mr Lui.
Newcastle upon Tyne is ranked as a first tier University City, according to a Savills report last year on UK student housing and is also the commercial, educational and cultural focus for the North-east region of England.
The properties are well-located within walking distance of educational institutions such as Northumbria University, Newcastle University Business School and Newcastle College, said the firm in an announcement to the Singapore Exchange.
The purchase price was based on independent valuation on each of the properties and factors such as location, potential source of rental income and recent transacted property prices in the vicinity.
The acquisition is not expected to have a material impact on the group's consolidated net earnings per share and consolidated net tangible assets per share for the current financial year ending December 2015.