Real estate players home in on student housing to cushion their portfolios 

PROPERTY groups and asset managers are putting more money into student housing, a sector that is proving to be a solid defence against the diminishing returns and crumbling valuations elsewhere in their portfolios.

A shortage of supply and rapidly growing demand have fed rents and bumped up returns in purpose-built student accommodation (PBSA) across major markets. In stark contrast, assets such as offices have been plagued by impaired valuations and high vacancies, which have hurt returns.

Most recently in June, CapitaLand Ascott Trust (Clas) acquired the remaining 10 per cent stake in a 678-bed, freehold student-accommodation property in South Carolina in the eastern US. The acquisition is expected to generate an Ebitda (earnings before interest, taxes, depreciation and amortisation) yield on total development costs of about 7 per cent.