89.3 MONEYFM TRENDSETTERS: Q INVESTMENT PARTNERS
18 June 2019
Peter Young had the pleasure of sharing with Singapore’s first and only business and personal finance station MONEY FM about co-living and how investors in Asia are gaining access to the defensive real estate asset class through QIP’s start-to-finish investment platform.
Co-living is about providing an affordable and conducive living environment for professionals in expensive urban cities. Tenants enjoy great private space, convenient shared amenities and access to a thriving community – factors that strengthen tenant stickiness and make co-living a viable, investable thesis.
QIP HOSTS INVESTMENT SEMINAR AT LOTTE HOTEL, SEOUL
14 May 2019
QIP hosted its first investment seminar at Lotte Hotel, Seoul where we shared our thoughts on opportunities in alternative real estate sectors such as student housing and Co-Living to the Korean investment community. It was a huge success and a full house!
Special thanks to Carol Park and the team at Access Communications for making it all happen!
CO-LIVING BECKONS TO PRIVATE EQUITY INVESTORS
4 March 2019
As co-living gains traction around the world, it is drawing attention not just from young people looking for an affordable, communal way of living, but also from investors eyeing its promises of stable returns and potential for growth amid rapid urbanisation.
Developers may soon have to take note, too, as demand grows for partners who are fully integrated and able to create well-rounded, communal experiences for end-users rather than just brick-and-mortar buildings, says Peter Young, co-founder and chief executive officer of Singapore-based real estate fund manager Q Investment Partners (QIP).
This is because property is becoming more like a service than a commodity in the sharing economy, as people value different experiences and a better living environment over ownership.
"The world is changing. The world isn't about holding assets and ownership, and having long tenancy with a single landlord anymore," Mr Young told The Business Times. "The user groups are more picky, more specialised, and more nimble. In this very quickly changing world, the sharing economy is impacting real estate as well."
QIP is offering Asian investors the opportunity to invest in this asset class through its partnership with co-living developer and operator The Collective, which runs The Collective Old Oak in London, said to be the largest co-living development in Europe. The two companies collaborated for the first time on a co-living project in Chicago in October 2018, and plan to work on more in gateway cities in the US such as New York, Boston and Miami.
"We want to build an investment platform that focuses on co-living and shared living in a way that is scalable, that we can bring to the institutional investor market," said Mr Young. "From QIP's experience in developing student housing, we know about building and creating a product for the end user with an income stream that moves the sector into an institutional space. From an investment perspective, that's our vision for co-living."
While co-living is often portrayed as part of a hip lifestyle targeted at millennials, it reaches a larger user base by addressing other issues like a severe lack of housing supply in major cities and changing consumer habits, such as people choosing to settle down later in life.
The Collective Old Oak's occupants reflect this wider target market, ranging in age from 18 to 60 years, with 25 per cent above the age of 35.
However, The Collective co-founder and CEO Reza Merchant thinks the millennial mindset still figures large in co-living and the way residents seek constant learning and growth through interactions with one another.
The Collective Old Oak hosts 25 events every week ranging from business support and other educational classes to recreational events with musicians and DJs, and has seen businesses start, love blossom and lives transform in various ways through the community.
"Connections and interactions are really what this generation is about, and they are priceless," said Mr Merchant. "What price do you put on meeting your future business partner or your future soulmate? It very much appeals to the mindset of today."
On a more practical note, he also points out that residents at the Old Oak project hail mainly from the growing middle-income segment, with an average annual salary of £34,000 (S$60,850).
"Think about how deep the demand is for the end product. If you look over the long term, the number of people on that middle-income range will only increase with growth in urbanisation," said Mr Merchant.
He added that co-living is not cyclical like other real estate asset classes such as office, retail and higher-end residential. In downturns, co-living could even see better returns as more people look to rent affordable accommodation.
Mr Young said QIP's strategy for co-living involves buying well, developing the co-living buildings on time, operating with the best in the sector and creating an income stream that drives an attractive internal rate of return of about 15 to 20 per cent over about three to five years.
With the asset class's similarities to student housing, he believes Singapore conglomerates that have invested in purpose-built student housing will be natural in-buyers to co-living as well. He also expects other investors to be won over by the lower dependence of co-living on economic circumstances for performance.
"We're seeing a change in family and private clients, from simply investing in a condominium and hoping for capital appreciation, to looking at who they are partnering with and the basis of return that they're likely to get, typically through the development profit or creating something that has value," Mr Young said.
"Recent trends in capital profits in markets like Singapore and Hong Kong are very cyclical compared to some of these value-added things we do, where we've seen performance with 16 per cent per annum returns. That's where I think it's worth a comparison."
This article appeared in the Business Times featuring QIP CEO Peter Young
QIP AND HMLET HOSTS SINGAPORE'S FIRST GLOBAL CO-LIVING SUMMIT
26 February 2019
Thank you to everyone who attended Singapore's very first global co-living summit! Along with leading co-living players in Asia and the UK, we had a fruitful sharing of our thoughts on the global co-living wave, and answered questions on why we believe co-living is here to stay, and the sector's investment opportunities. Many thanks to Peter Young (Q Investment Partners), Reza Merchant (The Collective), Yoan Kamalski (Hmlet) and Ian Lau (commontown SG) for sharing your valuable insights!
This event is in the past and is no longer open to registrations.
QIP HOSTS CO-LIVING SEMINAR AT THE WORK PROJECT, HONG KONG
18 September 2018
QIP hosted an educational seminar at the Work Project, Hong Kong to speak about Co-Living as the next institutional real estate asset class. Key speakers QIP Head of Investment Ben Hall, QIP Strategic Advisor John Kennedy and Hmlet Director of Real Estate Dominik Wiesent share their insights on Co-Living from a tenant's, developer's and investor's perspective.
This event is in the past and is no longer open to registrations.
CO-LIVING IS REVOLUTIONISING CITY LIVING
20 Aug 2018
A new real estate asset class is attracting significant attention and pulling property investors back into cities such as London and Singapore.
Co-living apartment blocks offer private rooms that individuals can rent on flexible leases, starting from just a few days. In exchange for smaller private spaces, the apartments offer significant communal amenities that merge business and pleasure, with large living areas, shared kitchens and co-working desk spaces. Some co-living apartments even include gyms, spas, restaurants and cinemas. These developments are drawing investors’ attention back to London, a city that is suffering from low rental yields and declining house prices.
Co-living developments in the UK are appealing to the 17 million millennials and 1.7 million full-time students who live and work there. Currently, there are only 600 co-living beds available, so the opportunity is considerable. This is the real estate evolution that investors have been waiting for: city-centre living that is affordable and attractive to a new generation of renters who are looking to combine the benefits of the digital age with the comforts of modern life in central locations. The institutional interest is also increasing as this important market potential is finally being fulfilled.
In central London, rents have not kept up with the pace of house price increases after the global financial crisis, so yields have declined. Rents are at record highs, however, and the cost of living is exceeding earning capacity for many residents. In London, average rents are £34,622 ($60,733) a year and average salaries only £34,473, so most people have to consider home sharing or long and expensive commutes to live more affordably. On the other hand, co-living rents are all-inclusive and competitive. The monthly rental fee covers your apartment, furniture, WiFi and utility bills, as well as access to communal amenities. This makes it easy for renters to budget and is up to 25% cheaper.
In Singapore, co-living apartments are primarily geared towards young expats whose short-term plans require a greater amount of flexibility. Early pioneers had an unsuccessful start even though occupancy rates were high. Recent entrants, such as Mamahome and Hmlet, are showing how the model can work in Singapore, even though issues of home affordability— which plague the likes of London — are minimal and the longer-term success of these developments has yet to be seen. In Singapore, home ownership stands at above 90% as HDB provides subsidised public housing for locals. This may uniquely limit the scope of co-living in Singapore to expats. So far, however, it has proven quite popular with the target demographic.
When Hmlet@Joochiat was launched last September, it gained a 95% occupancy rate within six weeks of opening. In London, the issues of affordability and availability are well known. Co-living has therefore become an affordable way for young Britons to live and work in the country’s capital and the development pipeline is strengthening. It is still early days, but we are already seeing signs that this is an exciting asset class for investors to consider.
The Collective was London’s first large-scale co-living development. Since it was built in 2016, developers have been quick to submit plans for new sites in key locations across London, including Canary Wharf and London Bridge. The Collective, no doubt inspired by the likes of other sharing economy pioneers such as WeWork and Airbnb, has since raised US$400 million ($552 million). Its expansion plans will take it to the US and Germany, as well as further sites in the UK.
Co-living was recognised by the Greater London Authority as an accommodation class in its draft London Plan — a policy document that
provides guidance to London councils. Still, the definition of “co-living” is not yet clear and consistent. It is also important to ensure the location is right and the product will be institutional
grade. The planned exit, and how it will be achieved with each specific product, is critical.
This article written by CEO Peter Young appeared in Edgeprop 20 Aug 2018.
QIP HOSTS CO-LIVING SEMINAR AT DBS AUDITORIUM
15 September 2018
DBS Chief Investment Officer, Mr Wey Fook Hou spoke on DBS's Q3 2018 market views. QIP Head of Investment Ben Hall and John Kennedy, Strategic Advisor to QIP and a pioneer of UK Student Accommodation, shared their views on the living trends of millennials and the emergence of co-living as an institutional real estate asset class. Special guest Zenos Schmickrath from Hmlet Singapore was in attendance and participated in the Q&A session.
This event is in the past and is no longer open to registrations.
QIP SECURES SENIOR DEBT FINANCE FOR 284 BEDROOM STUDENT ACCOMMODATION IN SHEFFIELD
26 March 2018
• The company has secured senior debt financing with UK-based Shawbrook Bank, a specialist funder that offers development finance within the residential real estate market
• Working with QIP’s real estate delivery partners in London, DML Development Managers Ltd, they have also secured construction group Bowmer & Kirkland, who will begin the build later this month
• This represents a major milestone for Asian investors who want to access UK purpose built student accommodation assets
Singapore-based Q Investment Partners, announced today that they have secured debt finance from UK bank Shawbrook for their purpose built student accommodation (PBSA) development in Sheffield, England. UK real estate group Bowmer & Kirkland are confirmed as the main contractor and are scheduled to commence works in March 2018 under a fixed-price contract.
“This is a significant milestone for Asian investors who are seeking access to UK PBSA assets. Without companies such as QIP and our UK delivery partners DML, an investor would need local UK presence in order to secure the finance. This can make it an expensive, time-consuming and resource-heavy task,” says Ben Hall, Head of Investment of Q Investment Partners.
Asian overseas real estate investors are becoming increasingly interested in alternative forms of property investment in markets such as the UK. Traditional residential routes are facing higher taxes and stricter regulations. According to QIP, this is having a positive impact on the purpose built student accommodation market.
“Regardless of Brexit, the UK maintains its appeal and Asian investors still want to hold UK investments,” says Hall.
QIP’s PBSA development in Sheffield was launched and closed in July 2017. The company has now secured GBP20m of debt finance from UK bank Shawbrook. QIP originally sought debt finance throughout Asia, including Korea, Hong Kong, China and Singapore, before agreeing terms with Shawbrook in the UK.
“Securing senior and mezzanine development finance is becoming harder, particularly in the UK. We are delighted that we have secured debt finance from Shawbrook. They are a proactive bank, that understand regional markets across the UK and offer real estate expertise in development finance,” says Hall.
Terry Woodley, Director of Development Finance at Shawbrook says, “This is an exciting transaction for us as we continue to support residential development projects across the UK. QIP is an incredibly experienced and knowledgeable partner who we are proud to be working with.” When it came to uncovering the right construction partner, the QIP team wanted to work with a contractor who had experience building PBSA, ideally in Sheffield, and an outstanding track record. The pool of options was limited but one company stood out.
Rachel Warren, DML’s development director, says, “We needed to find a main contractor who could work with us to achieve our strict budgets and timescales. We are impressed with their approach and believe we have the right building team in place. They are one of the UK’s largest independent construction groups with considerable experience in delivering projects of this type.”
Bowmer & Kirkland Regional Director, Steve Chambers, says, “We have a specialist team in place for projects such as QIP’s Sheffield PBSA development. We are currently in the process of completing a scheme for Chinese investors, with a construction value of GBP67m, which is also in Sheffield. We understand how to build quality housing primarily aimed at overseas university students and how to work with companies such as QIP and DML on delivering value for investors.”
QIP OFFERS FIXED INCOME INVESTMENT IN UK STUDENT HOUSING PROJECT
11 December 2017
The continued uncertainty over the Brexit talks in the UK and the fluctuating pound sterling has clouded the investment horizon of investors, particularly "private wealth", namely high-networth individuals and family offices, says Peter Young, CEO and co-founder of Singapore-based boutique real estate fund manager Q Investment Partners (QIP).
In the middle of this year, QIP launched its maiden project under its develop-operate-sell model: a 284-bed, purpose-built student accommodation in Sheffield, the UK. Roadshows in Hong Kong and Singapore in June raised GBP9 million ($16 million) in equity for the development. The minimum entry level for investors was GBP350,000, with a four- to five-year investment horizon. Investors can expect a 16% annual non-compounding return, net of fees, according to Young. The fund has closed, and construction of the project, which is expected to take about two years, has begun.
With the protracted uncertainty over the Brexit talks, some investors who had purchased residential properties five to 10 years ago may reap gains upon selling these assets. However, they are unable to realise their investment as the pound has weakened, and doing so will mean incurring a net loss upon currency conversion.
Recognising the predicament such investors are in, QIP is offering them an option to invest in a shorter-term, fixed-income product for its second student accommodation project in 1Q2018. While investors can still opt for the longer-term direct investment into the develop-operate-sell model, there is a second option for those with a shorter time horizon. According to Young, the entry level is also lower, from GBP150,000, and an annual coupon rate of about 8% will be paid in pounds.
This second student housing project is located in Nottingham. It comprises 350 beds and has an estimated gross development value of GBP35 million. "The fixed-income product is tailored for investors who are still holding on to the pound sterling and looking at a shorter investment time frame with stable returns," says Young.
Glenn Howells Architects (GHA), famous for its design of the 27-storey Urbanest student housing tower at King's Cross and the student housing at Leamington Spa old town, is the appointed architect for the student accommodation project in Nottingham.
Potential in build-to-rent market
Besides purpose-built student accommodation, QIP sees potential in the build-to-rent sector. According to the British Property Federation's latest figures, there are 95,918 build-to-rent units either completed or planned across the UK, including 17,001 completed and 24,012 under construction, and a further 54,905 with planning permission. Of the 95,918 build-to-rent units, 54,978 (57%) are in London, and 40,940 outside of London. BPF is projecting that the build-to-rent market could drive property investment to GBP70 billion by 2022 and supply is projected to hit 240,000 units by 2030.
According to QIP's Young, the firm will look at the build-to-rent market in London and focus on projects with gross development value of up to GBP50 million. It will also adopt the same develop-operate-sell model for its build-to-rent projects as that for its purpose-built student accommodation projects.
"Institutional investors are still investing in the UK real estate market as it's still perceived as an attractive asset class over the long term with the added benefit of the weaker pound," notes Young. "High-net-worth investors behave differently. As long as visibility is unclear, they are less willing to make a longterm bet on the market." As a result, QIP had to change its fundraising strategy in its next project in response to the way these individual investors look at returns.
With the Singapore property market, especially the residential sector, recovering, some of the high-net-worth investors have also started to relook at investing in the local market. "I think it's starting to happen," says Young. "The en bloc sales have excited everyone, and the Singapore market is looking more positive. However, that hasn't affected investor interest in the UK market."
This article, written by Cecilia Chow, appeared in EdgeProp Pullout, Issue 809 (Dec 11, 2017)
WHY 2018 IS THE YEAR TO DIVERSIFY YOUR REAL ESTATE INVESTMENT PORTFOLIO
29 January 2018
At QIP, a Singapore-based private equity real estate firm, we are firm believers that investing into property should be part of every investor's portfolio.
However, each individual sector of property has an upside and a downside, and for those who are looking to invest in markets such as the UK, 2018 is a good time to see which non-traditional options are available that might better suit the economic forecasts and investor sentiments for the years ahead.
Real estate is featured in only 20 percent of Asia Pacific Family Office portfolios and yet it has proven itself to be a reliable class of asset, particularly for those seeking longer term returns.
Real estate has consistently provided positive returns with low volatility for investors so why have more investors not entered into the property market?
Many individuals place their trust in bricks and mortar - investing into an asset that can be seen and touched - however, the implications of becoming a landlord (particularly a residential property landlord) can be off-putting for many high net worth individuals and family offices in particular.
The majority of Singaporean real estate investors have full time careers away from property. As an asset class, it is "high maintenance". Property requires considerable time, energy and further capital to be a well-managed, long term investment.
Arranging furnishings, sourcing tenants, checking references, managing deposits and keeping the property maintained are important, yet time consuming aspects of becoming a real estate landlord.
In addition, landlords need to keep up to date with the various laws affecting overseas property investors, not to mention annual tax returns and regulatory matters that must be adhered to.
If you are an accredited investor, then you may want to consider the most efficient and profitable way to still benefit from real estate without the need to be as hands-on.
REITS are often invested into for this reason, but they are subject to the risks inherent in equity markets, and the tradeable price is often reflective of investor sentiment and not necessarily the underlying asset value. However, REITS are an easy-in and easy-out option.
Areas of real estate investment that are becoming increasingly popular for professional investors include student accommodation, retirement homes and healthcare, which tend to sustain growth throughout economic cycles due to the demands inherent in these types of residence.
For example, in the UK there is currently a critical undersupply of property for university students and the pipeline of new developments is not sufficient to meet demand.
International student numbers are high, and they expect modern, well-equipped and well managed rooms throughout their university studies. However, the vast majority of available accommodation is converted residential housing that is subsequently registered as HMO (houses in multiple occupation). These tend to be located out of town and are poor quality due to minimal management and upkeep. Meanwhile, the demand for city-centre accommodation with good amenities is rising rapidly.
In terms of investment risks, with Brexit on the horizon, the number of EU students in many of the country's universities is relatively minimal so even if there was a notable decline in EU student applications, this would have a nominal effect on the demand from overseas students as a whole, which is far outweighed by countries outside of Europe such as China.
There is significant value in diversifying your investment base this year, both into real estate as an asset class and amongst the various real estate sectors that are available such as student accommodation.
The global economy has finally recovered from the financial crisis of nearly a decade ago and central banks are tentatively starting to normalise policy. The economic cycle is relatively mature, but the warning signals of the next recession are still largely absent, especially with a short-term boost to come from US tax cuts.
As ever we can find risks - geopolitics, Brexit, trade friction, Chinese credit bubble - but they do not seem unusually intense. However, valuations of financial assets are stretched, which is the main challenge in constructing an investment portfolio and which is why diversification is key.
This article was printed in Edge Prop and written by Alex Bellingham, Head of Capital Raising at Q Investment Partners
QIP OFFERS OPPORTUNITY TO INVEST IN UK STUDENT ACCOMMODATION
19 June 2017
The student housing sector has become increasingly hot, fuelled by multibillion-dollar acquisitions by Singapore's sovereign wealth fund GIC and Temasek-linked Mapletree Investments. Early this month, Maple tree Investments purchased a portfolio of student housing and multi- family properties in the US and Canada. This brings its total portfolio of student housing assets in North America and the UK to 43, with a total of 18,024 beds. The portfolio includes assets held under its sponsored Mapletree Global Student Accommodation Private Trust.
Peter Young, co-founder and CEO of Q Investment Partners (QIP), a Singapore-based boutique real estate fund manager, feels there is a niche for non-institutional investors who want to invest in student housing assets, but do not have the financial muscle of GIC and Mapletree to buy entire portfolios of assets.
The investors that QIP is targeting are high-net-worth individuals (HNWIs) and family offices that want to invest in institutional-grade properties, but may not have access to them.
"We [run] a buy, develop, operate and sell model, to enhance the value of the asset," says Young. "We occupy a niche between providing HNWIs with institutional-level real estate that they would ordinarily not have access to, and institutions such as GIC and Mapletree, which seek to buy yielding assets, but don't have the capability to develop them."
QIP is offering an "asset-by-asset" investment approach. Part of the attractiveness of this approach is that it is easy for HNWIs to understand what they are buying into in terms of the location of the project, financing terms, investment period and exit strategy, says Young.
The firm's first investment opportunity is a 284-bed purpose-built student accommodation block on West Street, the main thoroughfare of Sheffield city centre, in South Yorkshire, the UK. QIP is looking to raise £9 million ($16 million) in equity for the development.
The student housing block is located less than 1km from major academic institutions such as the University of Sheffield and Sheffield Hallam University, as well as retail and transport facilities. Sheffield presents an opportunity as existing and future developments cater to only 40% of the student population of 60,000, says Young.
The minimum investment is £350,000, with a four-year investment horizon. Investors can expect to get 16% annual non-compounding return, net of fees. Roadshows to raise capital in Singapore and Hong Kong have seen "an overwhelming response", says Young.
In the UK, QIP works with Development Managers Ltd, a development and project management company headed by Kevin McGovern, who has a team of 16 professional staff. Besides handling the development and project management of QIP's project in Sheffield, DML has also invested in it. McGovern was formerly with American real estate builder and investor Tishman Speyer Properties, Canadian real estate company Markborough Properties and Rosehaugh, a major property developer in the City of London and Docklands in the 1980s. The team will develop QIP's development and investment projects in the UK.
Upon completion of the accommodation block, QIP will operate the asset until it has achieved stable income, generally over a two- to three- year period. The exit strategy will be to sell to a property fund or institutional investor buying into the income stream, says Young.
According to QIP Head of Capital Raising Alex Bellingham, the attraction of the student housing sector is "its counter-cyclical aspect". Unlike residential property, which is affected by both political and economic uncertainty, the recent UK election has had "zero effect" on the student housing sector, he adds. What will affect the student housing market, and specifically QIP's development, reasons Bellingham, is the number of international students in the location.
QIP is also looking at Nottingham as a potential location for a student housing development, as well as Birmingham and Edinburgh, cities with top-tier universities. The target is to have a pipeline of four student housing assets of £30 to £40 million each, with an eventual portfolio size of £150 million, says Young.
QIP chose to focus on the UK student housing sector owing to its principals' track record in developing and investing in such assets. Young, for instance, was CEO and executive director of IP Investment Management for two years until November 2015. Prior to that, he was investment director at IP Global for two years. IP Global was founded in 2005 by its chairman, Tim Murphy, who specialises in property investments around the globe.
At IP Global, Young was involved in the investment and development of six student housing projects with over 800 beds in six cities, such as Birmingham, Cardiff and Edinburgh. Those investments achieved internal rates of return ranging from 12% to 20% over a three-year period.
Bellingham was formerly IP Global director and head of its Singapore office for seven years. He was also the officer responsible for IP Global's fund management business in Hong Kong before joining QIP.
In the course of marketing projects from around the world at IP Global - Birmingham, London and Manchester in the UK; Chicago in the US; Melbourne, Australia; Niseko, Japan; and Berlin, Germany - Belling ham has seen many clients accumulate property over the years. He has, likewise, done the same. "It was always about the ease of buying a property and generating returns for clients," he says. "However, with the new taxes in place and difficulty in securing a mortgage, it has become harder to find value buys."
At QIP, the team will be rolling up their sleeves, undertaking development of their projects, securing financing, and operating or letting out the assets to generate returns for investors. "The assets will then [be] flipped to institutional investors looking to buy into the income stream," says Young.
The recent weakening of the pound sterling has increased the purchasing power of most international students planning to study in the UK, reckons Young. "Given the large number of established, high-ranking universities in the UK, a degree from a British university will remain a major draw irrespective of Brexit and the geo political environment," he adds.
Bellingham agrees. "The current position of the pound against many of the main currencies, including the US dollar and Singapore dollar, is also good for our investors as many of our clients are taking advantage of the current cheap currency to stay invested in Britain."
He believes the student housing sector will continue to boom. In periods of uncertainty, more people will leave the workforce to seek a quality education, and possibly a change in careers, Bellingham notes. "This could further increase demand for student housing, thereby worsening the supply-demand metric."
QIP has seven staff members in Singapore.Young's equity partner and QIP co-founder is Singaporean Eu Khoon Ang, executive director of the firm and an entrepreneur who has invested across a wide range of venture capital and private equity businesses.
Besides student housing, QIP also sees potential in aged care and build-to-rent sectors in the UK. The private equity firm is also focusing on two other markets, Australia and the US, where it sees potential in student accommodation and aged care.
This article appeared in The Edge Property Pullout, Issue 784 (June 19, 2017) of The Edge Singapore