Category: Perspectives

Understanding the Living Sector: Growth and Market Appeal

Posted on by thahira

Understanding the Living Sector: Growth and Market Appeal

  • February 28, 2025

Written and contributed by QIP's Marketing Team

The global residential living sector has become a high-performing and resilient asset class, providing investors with an attractive alternative to traditional real estate. Purpose-built accommodation is one of the rising stars in the living sector which offers scalable investment opportunities with consistent rental demand and professional management. Investors are increasingly drawn to this sector, not just for steady rental income but also for its institutional appeal, making it an ideal choice for private equity real estate funds and investors seeking long-term value.

In this article, we examine why purpose-built residential real estate is a compelling investment, the key advantages it offers, and how QIP’s strategic approach provides access to exclusive opportunities in the thriving living sector.

What is Purpose-Built Residential Real Estate?

Real estate can generally be divided into residential and commercial properties—while commercial real estate includes offices, retail spaces, and warehouses, residential real estate is designed specifically for people to live in. Within the residential sector, purpose-built residential real estate (PBR) stands out as a category designed exclusively for rental occupancy. Unlike traditional homes that can be bought, sold, or repurposed, PBR developments are built from the ground up with a clear rental focus, offering professional management, dedicated amenities, and long-term tenant demand.

Some common types of purpose-built residential properties include:

  • Purpose-Built Student Accommodation (PBSA): Designed for students, typically near universities, with study areas and communal spaces.
  • Multi-Family Real Estate: Apartment buildings with multiple rental units, providing stable income and attracting institutional investors.
  • Co-Living Apartments: Designed for young professionals, offering shared amenities and flexible leases.
  • Build-to-Rent (BTR) Developments: Large rental communities with professional management and long-term leasing.

 

As urban populations grow and homeownership becomes less accessible, purpose-built residential real estate provides a reliable and scalable investment option.

Benefits of Residential Real Estate Investing

For investors seeking long-term stability and steady returns, residential real estate presents several advantages which include:

1. Strong & Consistent Demand

Residential housing offers a steady pool of tenants, making it a secure and attractive investment opportunity. As housing is a basic need, there’s always demand for rental housing properties, giving investors a reliable income stream. This consistent demand helps make residential properties more resilient, making it easier for landlords to find tenants and earn stable rental income.

2. Lower Barriers to Entry

Residential investments typically have lower initial costs, both in terms of purchase price and financing requirements, making them more accessible for beginners. This makes them a practical entry point for new investors looking to enter the market with a smaller capital outlay. Firms like QIP offer access to private equity real estate funds for investors to tap into portfolio diversification opportunities.

3. Rising Rents & Stable Income

Residential real estate offers a dual advantage of property appreciation and rental income growth. As demand for housing increases, property values rise over time, providing long-term capital gains. Additionally, rising rents, driven by inflation and supply constraints, ensure consistent income generation—making real estate private equity an attractive avenue for investors seeking passive income with growth potential.

4. Tight Supply & Competitive Rentals

The tight rental markets, marked by limited supply, make purpose-built housing investments increasingly attractive. With demand outpacing availability, properties like a multi-family investment property are poised for growth. This constrained supply boosts the value of these assets, making them a promising option for those seeking long-term investment potential.

With these advantages, investors are increasingly looking to alternative assets such as student housing and multi-family real estate as lucrative investment opportunities.

How QIP Capitalises on the Sector’s Opportunities

QIP is actively expanding its UK PBSA portfolio, with a focus on tier-1 university cities where student demand outpaces supply. This expansion aligns with our data-driven investment strategy, which targets markets with limited housing stock, rising student populations, and strong rental growth. In the coming months into 2025, we have new developments in the pipeline in cities like London and Edinburgh, further strengthening our position as a key player in the UK student housing platform. Beyond student accommodation, we continue to grow our multi-family investment property portfolio as we hit another milestone and have begun leasing efforts at Straits Row, QIP’s flagship residential development in Chicago, in partnership with US-based Melrose Ascension Capital (MAC). As the residential real estate sector remains resilient, QIP is committed to delivering stable, long-term investment returns backed by strong rental fundamentals and market resilience.

Source:
      JLL – Commercial vs Residential Real Estate: Pick the Best Investment for You
      Julius Baer – Wealth Matters: How to Invest in Real Estate?
      IP Global – Investing in Commercial vs. Residential Property: Which is Right for You?
      Wealth Professional – Tight rental markets boost demand for purpose-built housing investments in 2025

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How International Students are Fuelling the Resilience of the UK PBSA Market

Posted on by thahira

How International Students are Fuelling the Resilience of the UK PBSA Market

  • December 12, 2024
Understanding Global Demand for PBSA Market

Written and contributed by QIP's Marketing Team

The UK has long been a global beacon of academic excellence, attracting students from around the world. This global appeal directly contributes to the growing demand for the UK Purpose-Built Student Accommodation (PBSA) sector, as students look for accommodation designed to provide an ideal solution, offering not just proximity to universities but also community-focused amenities and essential support services. With the UK’s reputation as a leader in higher education and its growing base of international students,private equity real estate investors are well-positioned to capitalize on the rising need for quality student accommodation

, ensuring stable returns even in challenging economic conditions.

Read More: UK Purpose-Built Student Accommodation (‘PBSA’) – Understanding the Factors Behind This Resilient Sector

Why the UK remains attractive for international students

The UK continues to attract a growing number of international students, with applications rising by 26.1% between 2014 and 2023, according to Colliers. Notably, 84.8% of these students are from non-EU countries, underscoring the UK’s strong global appeal. India and China remain key contributors to this growth. India’s outbound student numbers hit 1.1 million in 2022, projected to reach 1.5 million by 2025, while in the 2022/23 academic year, more than 154,000 Chinese students were studying in the UK. 

Savills’ recent article on UCAS application numbers and their impact on PBSA also highlights the UK’s appeal as a desirable destination for students. Despite challenges for the AY 2024/25, the latest UCAS data reveals a 4.7% increase in international undergraduate applicants for early-deadline courses, showing early signs of optimism for UK higher education. 

Dr Jo Saxton CBE, Chief Executive at UCAS said, “It’s welcome news to see that global confidence in the UK’s higher education sector remains strong, with an increase in international undergraduate applicants to UK universities and colleges for early deadline courses.”

World-Class Institutions

One of the biggest draws for international students is the UK’s reputation for academic excellence. Particularly renowned are its Russell Group universities—24 elite institutions that consistently rank among the top globally. These universities are known for:

  • World-Class Education and Research Excellence: Russell Group universities offer a rigorous academic environment and are leaders in cutting-edge research, drawing top-tier international students seeking contributions to advancements across various disciplines.
  • Strong Global Reputation: UK degrees are highly regarded by employers worldwide, enhancing graduates’ employability and making the UK a top destination for higher education.
  • Career Prospects: With strong ties to industries and businesses, UK universities provide students with valuable networking opportunities and a competitive edge in the global workforce.

Beyond Academics

The UK offers a rich cultural experience that appeals to students worldwide. Its multicultural environment fosters cultural exchange and language development, creating an inclusive and global atmosphere which allows for a network extending far beyond their studies. International students in the UK also consistently report high levels of satisfaction with their living and learning experience, citing robust support services, safe campuses, and access to social and welfare services as the main contributing factors.

The increasing international student population has further driven the demand for student accommodation, as living conditions play a critical role in students’ decisions to study abroad.

Why Students Prefer to Stay in UK PBSAs

UK Purpose-Built Student Accommodation is a preferred choice for international students as it provides more than just a place to live—it offers a sanctuary for students to thrive academically, socially, and personally.

UK student housing platforms work with student accommodation providers to meet the unique needs of students, with features like 24-hour security, on-site management, and a range of student support services that create a safe and comfortable environment.

While PBSAs may seem more expensive than traditional rentals, they often offer better long-term value, as they are typically all-inclusive, covering utilities, Wi-Fi, and maintenance. This eliminates the worry of unexpected expenses and provides flexible lease terms suited to international students’ needs. Additionally, such student accommodations are strategically located near universities, saving students time and money on commuting and ensuring easy access to libraries and extracurricular activities.

QIP’s PBSA portfolio stands out in this sector, providing not just housing but a supportive, engaging environment where students can flourish. In partnership with Prestige Student Living, the premium brand of Homes for Students, QIP offers properties equipped with lounges, gyms, study rooms, cinema rooms, and on-site laundry facilities. These amenities foster a community atmosphere, enhancing students’ academic focus and social connections, creating a holistic living experience that sets these accommodations apart.

Why UK PBSAs Present a Great Investment Opportunity

PBSAs are particularly appealing to overseas students, who are 60% more likely to live in one compared to their domestic counterparts. The influx of international students not only drives demand for quality accommodation but also exacerbates the supply-demand imbalance, creating ripe investment opportunities for private equity investors. University admissions are at record highs, yet the availability of student accommodation has not kept pace. According to PBSA News, this shortfall in student housing has driven rental prices higher, making it an attractive time for investors to enter the market.

Student accommodation investment firms stand at the heart of these opportunities Looking ahead, the demand for PBSA is only expected to grow. The UK anticipates an influx of 2.2 million students by 2026, yet current supply projections indicate a gap of around 620,000 beds. With demand consistently outstripping supply, the sector presents an excellent investment opportunity for investors in private equity real estate, who can capitalise on the strong potential for growth as the need for quality student housing continues to rise.

Read More: Student Accommodation Continues to be a Hot Market: 3 Key Considerations Before Investing in the Sector

Source:
       Savills: Savills Blog | UCAS application numbers and the impact on Purpose-Built Student Accommodation
       UCAS: UCAS releases undergraduate end of cycle data for 2024
       Colliers: Demographic trends are reshaping the UK student accommodation market
       Savills: European PBSA Investment Barometer Report 2024
       

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Student Accommodation Continues to be a Hot Market: 3 Key Considerations Before Investing in the Sector

Posted on by lynn

Student Accommodation Continues to be a Hot Market: 3 Key Considerations Before Investing in the Sector

  • August 16, 2024

Written and contributed by QIP's Marketing Team

The global real estate landscape is witnessing a surge in a once-niche market: student accommodation. Investor interest is skyrocketing, with Singaporean investors, including  institutions and private equity firms playing a significant role. Holdings by Singaporean companies alone have reached a staggering $22 billion, with real estate giants like GIC, CDL, and Mapletree making substantial acquisitions over the past two years, especially in the UK. This trend is projected to continue, with the global purpose-built student accommodation (PBSA) market estimated to reach a value of £104 billion by 2028.

Why is Student Accommodation Such a Compelling Real Estate Investment?

This surge in popularity begs the question: What makes student housing such an attractive investment opportunity globally? The key factors can be summarised into four points:

  • Recession-Resilient: While not entirely immune, the student accommodation market is more resilient compared to other asset classes during economic downturns, as the counter-cyclical demand for higher education drives demand for student housing.

  •  

  • UK Student Population Surge: The UK’s student population is at its peak, with a 5% rise expected next year alone. This increase means more young people seeking university places and, subsequently, accommodation. The Universities and Colleges Admissions Service (UCAS) reports a 24% surge in acceptances from pre-pandemic levels, fuelled by a rise in international students from outside the EU.

  •  

  • Chronic Undersupply: The supply of new PBSA in the UK is lagging due to high construction costs, stringent planning laws, and the need to modernise outdated facilities. With an estimated national shortfall of 580,000 beds, the squeeze is being felt. Despite this, investment in PBSA remains strong due to robust operational metrics and promising return prospects. As the sector navigates through economic recovery, easing inflation, and stabilising debt markets, 2024 looks promising for investors.

  •  

  • Attractive Returns and Strong Rental Growth: Student accommodation benefits from a predictable income stream and relatively stable occupancy rates. This stability translates into attractive returns through consistent rental income and potential for capital appreciation. Rental prices have risen significantly, with PBSA costs increasing by 10.1% per person per week in 2023. This strong rental growth is expected to persist, enhancing the overall attractiveness of the asset class.


3 Key Considerations Before Investing in the Sector

The compelling benefits of student accommodation—resilient demand, consistent cash flow, and attractive returns—might have you itching to invest. However, careful planning is crucial. Here are three key considerations to navigate the market effectively:

#1 Regulatory Changes

As with all real estate investments, the PBSA market is susceptible to local and national regulations. Recent regulatory shifts in the UK, including new policies from the Labour Party, could impact the student accommodation sector. Labour’s proposed reforms aim to stabilise university funding, support mental health initiatives, and influence immigration policies affecting international students.

Our Advice: Stay informed about these regulatory changes and their potential impact on student accommodation. Engaging with local communities, universities, and industry professionals can provide valuable insights and help you navigate any shifts in market dynamics.

 

#2 Management Intensity and Operational Challenges

Managing PBSA properties involves significant operational challenges, such as regular maintenance and addressing tenant demands. Tasks like cleaning common areas, repairing appliances, and landscaping are crucial for maintaining high occupancy rates and tenant satisfaction. The complexity of accommodation setups and seasonal variations can further complicate management.

Our Advice: To handle these operational challenges effectively, adopt best practices like conducting regular property inspections to identify issues early. Ensure that on-site staff are well-trained and responsive, and use technology solutions such as self-service portals and mobile apps to streamline maintenance and management. Partner with experienced operators with a strong track record in managing complex PBSA properties.

 

#3 Understanding Evolving Student Needs

    • Student preferences and requirements are rapidly changing, with a focus on quality of life, advanced technology, personalised experiences, mental health support, sustainability, and inclusivity. PBSA operators must adapt to these changes to stay competitive and meet tenant expectations.

    •  

    • Our Advice: Stay ahead of changing preferences by conducting thorough market research and engaging with students through surveys and feedback. Invest in technology for enhanced service delivery and offer flexible accommodation options to cater to diverse needs. Foster an inclusive environment with culturally sensitive practices and celebrations. Collaborate with industry leaders who are adept at understanding and responding to evolving student demands.

    •  

 

Long-Term Perspective:

PBSA operators encounter a range of challenges, including maintenance demands, evolving student preferences, and regulatory changes. Addressing these challenges effectively requires proactive measures such as regular market research, technology integration, and a deep understanding of student needs. By partnering with experienced developers and operators who have a strong track record and expertise in PBSA management, investors can navigate these complexities and achieve long-term success.

 

QIP is a Singapore-headquartered private equity real estate firm with offices in London and New York. Our team and Principals have a distinguished track record in the residential living market, including over 15 years of experience in UK student accommodation. Consult with our team today to develop a UK PBSA investment strategy that aligns with your long-term goals and leverages our expertise in this dynamic sector.

Source:

  1. Value of PBSA sector to grow to £104bn by 2028, Knight Frank finds
  2. The rise — and rise — of global student housing investment 
  3. Guide to Property Investment in Student Accommodation
  4. Singapore investors have bought up $22bn of student housing globally
  5. Is Student Housing Recession-Proof?
  6. UK Purpose-Built Student Accommodation (‘PBSA’) – Understanding the Factors Behind This Resilient Sector
  7. Labour in power: what would it mean for PBSA?
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Strategies in Alternative Asset Management: Balancing Risk and Reward

Posted on by lynn

Strategies in Alternative Asset Management: Balancing Risk and Reward

  • March 13, 2024
Strategies in Alternative Asset Management

Written and contributed by QIP's Marketing Team

Alternative assets have become integral to diversified investment portfolios, providing investors with opportunities beyond traditional stocks and bonds. As the landscape of alternative investments continues to evolve, managing the associated risks becomes crucial. This article explores strategies in alternative asset management, focusing on the delicate balance between risk and reward.

Beyond Traditional — Understanding Alternative Investments

Alternative investments encompass a diverse range of assets beyond traditional stocks and bonds. Each type offers unique characteristics and the potential for diversification, attractive returns, and specialised exposure to niche markets. Some examples of alternative investments include (but are not limited to):

  • Real Estate: Investing in real estate directly or through Real Estate Investment Trusts (REITs) provides exposure to income-generating properties like apartments, office buildings, warehouses, and even land.

  • Hedge Funds: These actively managed investment vehicles employ various strategies to generate returns in any market condition.

  • Private Equity: Involves investing in privately-held companies, often with the goal of restructuring, growing, or improving their operations to increase value. This can include venture capital for early-stage startups, growth capital for expanding companies, buyout investments in established businesses, & distressed investing in struggling companies, among others.

  • Commodities: Physical assets like precious metals (gold, silver), agricultural products (corn, wheat, soybeans), and energy resources (oil, natural gas).

  • Infrastructure: Investments in essential assets such as transportation networks, utilities (power, water), and communication infrastructure.

Traditional Vs Alternative Investments

Compared to traditional investments like stocks and bonds, which offer direct ownership and often trade on public exchanges, alternative investments function through indirect ownership, often via funds managed by professionals.

These often involve active management strategies seeking to outperform the market, but come with a longer investment horizon due to their less liquid nature. Additionally, some alternative investments may have performance fees tied to their success. While both offer the potential for returns, understanding these key differences is crucial for investors to decide which asset class aligns best with their risk tolerance and investment goals.

Why Invest in Alternatives?

While traditional investments have long formed the bedrock of many portfolios, alternative investments are rapidly gaining prominence.

Higher returns

According to Preqin, alternative investments offer diversification benefits that can enhance overall portfolio performance. These assets often have a low correlation with traditional markets, providing a hedge against market volatility. Moreover, they can offer higher returns than traditional investments, making them attractive to investors seeking enhanced yield.

Diversification and Resilience

One of the primary attractions of alternative investments lies in their potential to enhance portfolio diversification and resilience. Unlike traditional assets, alternative investments often have a low correlation with conventional markets, providing a hedge against market downturns and economic volatility. This diversification potential can help investors achieve more stable returns over the long term while reducing overall portfolio risk.

Access to Niche Markets and  Specialised Strategies

Moreover, alternative investments offer access to niche markets and specialised strategies that may be unavailable through traditional avenues. For instance, private equity investments provide opportunities to participate in the growth of promising startups and private companies, offering the potential for substantial returns. Similarly, investments in real assets like infrastructure and real estate can provide income stability and inflation protection, making them attractive options for investors seeking long-term wealth preservation.

Understanding and Mitigating Risks

Alternative investments offer compelling benefits, but it’s also essential for investors to recognise the risks before allocating capital.

Illiquidity

Many alternative investments are less readily tradable than stocks and bonds, requiring a longer investment horizon and potentially hindering access to capital in the short term.

Complexity

Alternative investments often involve complex structures and investment strategies, requiring investors to conduct thorough due diligence and possess a strong understanding of the associated risks.

Regulatory Risk

The regulatory landscape surrounding alternative investments can be complex and subject to change. Navigating these regulations can be challenging, and unforeseen regulatory changes could potentially impact the performance or accessibility of certain investments.

Effective Risk Management

Effective risk management in investment involves several key strategies. Diversification is essential, where spreading investments across different asset classes, regions, and managers can mitigate the impact of individual risk factors, ensuring a more resilient portfolio. Active portfolio management is crucial; regularly monitoring and adjusting investments aligns them with evolving risk tolerances and financial objectives, preventing a “set and forget” approach.

Additionally, seeking professional guidance, especially for complex alternative investments, from qualified financial advisors & learned investment managers, helps navigate complexities and tailor strategies to manage risks effectively. Stress testing your portfolio under various hypothetical scenarios can also enhance resilience and prepares for market downturns.

The Bottom Line: Strategies in Alternative Asset Investment

Navigating the world of alternative investments requires a careful balance between potential rewards and inherent risks. While they offer the allure of higher returns, diversification and access to niche markets, investors must also be aware of and plan for their illiquidity, complexity and regulatory considerations.

By employing effective risk management strategies, investors can harness the potential of alternative investments and navigate this dynamic landscape with greater confidence.

Q Investment Partners prioritises rigorous risk management practices to help investors navigate complexities and maximise the potential of alternative investments. Reach out to us today to find out how we can help investors like you navigate and achieve your long-term financial goals.

Source:

Why Invest in Alternatives?
Are Alternative Investments For You?
Private Markets: 4 Steps to Help You Optimize Your Allocation to Alternatives
A Comprehensive Guide to the Pros and Cons of Alternative Investments
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Exploring the Dynamics of Private vs. Public Markets: Choosing Your Ideal Investment Strategy

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Exploring the Dynamics of Private vs. Public Markets: Choosing Your Ideal Investment Strategy

Private Equity Ideal Strategies for Market Dynamics
  • November 21, 2023

Written and contributed by QIP's Marketing Team

Making investment decisions in the dynamic financial landscape involves understanding the unique characteristics of private and public markets. In this blog feature, we delve into the details of these markets and their core differences, to help you tailor your investment strategy and align with your financial goals & risk tolerance.

Part 1: Public Markets

Public markets, as highlighted in McKinsey’s Private Markets Annual Review, stand as a cornerstone for investors, offering a range of advantages:

a. Liquidity: S&P Global notes that public markets boast high liquidity, providing investors with the flexibility to buy and sell assets effortlessly. This liquidity is particularly valuable for those who seek quick access to their investments or prefer a short-term investment opportunity.

b. Transparency and Regulation: McKinsey emphasizes the transparency and rigorous regulation characterizing public markets. Regular disclosure of financial information by publicly traded companies ensures that investors can make informed decisions based on accurate and up-to-date data.

c. Lower Barriers to Entry: Public markets offer a more accessible and often lower-cost investment option, open to the general public. This accessibility provides a wide range of investors with opportunities to participate in the stock market. The relatively low entry barriers make public markets available to both individual and retail investors.

d. Market Volatility: WealthBriefing sheds light on the cyclical nature of public markets and it’s susceptibility to significant volatility and macroeconomic uncertainty. While prices can fluctuate frequently, this volatility presents both risks as well as opportunities for investors.p

Part 2: Private Markets

Private markets, encompassing alternative investments and private equity in Singapore, offer a compelling array of factors showcasing their unique appeal:

a. Superior Returns and an Attractive Risk-Return Profile: Considering private markets becomes particularly enticing due to the potential for superior returns compared to public markets. Over time, private equity has demonstrated returns comparable to Emerging Market Equities and surpassing those of all other traditional asset classes. The combination of relatively low volatility and impressive returns contributes to an appealing risk-return profile.

b. Total Assets under Management (AUM) Growth: Total private markets AUM reached an impressive $11.7 trillion as of June 30, 2022, growing at an annual rate of nearly 20 percent since 2017. The second quarter of 2022 saw dry powder exceed $3 trillion, marking the eighth consecutive year of growth. In private equity, inventory spiked, reaching the highest ratio since 2013.

c. Resilience of Private Assets:

Investors are drawn to private assets, such as real estate investment, due to their non-cyclical nature and lower volatility. The illiquidity and absence of secondary market pricing contribute to this appeal, making private assets an attractive option, especially during times of market dislocation when financing from direct lenders in private credit becomes a reliable alternative.

d. Integration into Financial Markets: Private markets, including private equity in Singapore, have become integral to global financial markets and the real economy. The surge in global private equity- and venture capital-backed M&A transactions in 2021, totaling over $600 billion, underscores their increasing influence. Private equity and private debt have formed a symbiotic relationship, leading to a convergence between broadly syndicated and direct-lending markets. 

e. Performance Outpacing Public Equity: JP Morgan’s 2021 analysis found that the private equity industry continues to outperform public equity. Notably, private equity’s performance metrics consistently showcase outperformance against benchmark indices such as the S&P 500, S&P 600, and the Russell 2000.

Choosing the Right Investment Strategy

While public markets offer certain advantages in liquidity and accessibility, the dynamic landscape of private markets, coupled with their proven track record of growth and resilience, makes them an appealing option for those seeking long-term stability and potentially higher returns.

Diversification and due diligence remain crucial considerations. Our team of experienced professionals is ready to guide you through unique access and co-investment opportunities in institutional-grade real estate assets.

Source:

Private Markets: Still Waters Run Deep
Private vs public equity
McKinsey Global Private Markets Review: Private markets turn down the volume
Will Private Markets Overtake Public Markets?
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UK Purpose-Built Student Accommodation (‘PBSA’) – Understanding the Factors Behind This Resilient Sector

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UK Purpose-Built Student Accommodation ('PBSA') - Understanding the Factors Behind This Resilient Sector

Investors working
  • September 14, 2023

Written and contributed by QIP's Marketing Team

The student housing market in the United Kingdom has been witnessing a remarkable surge in recent years, driven by a growing demand for higher education and an increase in domestic and international students.

As a result, investing in UK student accommodation has become an attractive prospect for savvy investors seeking promising returns. This article explores the factors that contribute to the appeal of this market and sheds light on why it presents a lucrative investment opportunity.

Rising Student Population

UK universities are renowned for their academic excellence and diversity, thus attracting a constant influx of international students. With higher education enrollments soaring each year, hotspots like London, Bristol, Manchester, and Edinburgh are witnessing a thriving student housing sector. This mix of local and international students demands modern and secure accommodations near their institutions, creating a pressing need for investment. The result? A plethora of enticing, rock-solid investment opportunities. 

1. Private Landloards and HMOs Avoid Larger Housing

To meet the rising demand for student housing, it’s supply must increase. Private developers and investors can capitalise on the market gap stemming from university-provided dorms that fail to meet the needs of the modern student. This gap presents a great opportunity for investors to alleviate the supply constraints through the development of more purpose-built-student accommodations that supports students’ rising living standards.

2. Reassessing PBSA Supply Pipeline

Reassessing the UK PBSA supply chain is another recent issue. While the development of high-end PBSA initiatives have become a noticeable trend, affordable student housing is needed. The UK PBSA sector must grow to satisfy student needs. Diversifying its offerings in the market and providing mid-market PBSA to address the diverse demands of students and catering to individuals on tighter budgets both domestically & internationally

Attractive Rental Yields

With a limited supply of quality UK student accommodation, the potential for attractive rental yields becomes a significant probability that entices investors to invest in UK PBSA. The lack of supply means landlords can charge competitive rents, which leads to favourable rental yield percentages; this asset class is a lucrative option for many investors due to the higher returns on investments than traditional residential properties.

Long-Term Tenancy Stability

As it is common for students to sign tenancy agreements for the entire academic year, with some universities offering guaranteed accommodation to first-year students, ensuring consistent rental income for landlords, this long-term stability is reassuring to investors as it helps reduce the risks associated with property vacancies and fluctuations in the rental market.

Favourable Government Policies

When the United Kingdom reached its target of attracting 600,000 overseas students per year a decade ahead of schedule, the government announced it was “firmly committed” to maintaining that number.

In order to “maximise the UK’s education potential,” the update elucidates three priorities for the future. Growing and broadening the overall export base, ensuring the continued viability of the student recruitment market, and expanding the UK’s worldwide education offerings are priority.

Robust Transactional Activity & Momentum Beyond 2023

Defying market uncertainty, UK PBSA investment has surged since 2016, with the sector claiming a noteworthy 13% share of 2022’s CRE investments. A significant 82% of this investment originates from overseas sources, notably Singapore (24%). The sector is anticipating greater transactional vigour in this 2nd half of the year, fuelled by rising rents offsetting operational costs and bolstered by consistent student growth. Stripe Property Group’s forecast predicts an impressive resurgence, envisioning the UK PBSA market to reach £4.2 billion in 2023

Investors of private equity in Singapore, with a strong appetite for UK Student Housing, are familiar with the elements driving attractive returns for the sector and stand to gain from this predicted long-term growth. Market research and due diligence are essential for finding the best prospects and maximising returns in this booming industry, as they are with any investment.

Source:

Secure Trust Bank: PBSA is still attractive, provided investors follow four key principles to this type of real estate
London House Exchange: How we select PBSA properties
PBSA News: Checklist for successful investing in purpose-built student accommodation
 Savills_PBSA_Spotlight_May2023.pdf
Knight Frank: What does the journey to a million mean for UK student accommodation? 
Student_Accommodation_Market_Snapshot_April_2023.pdf
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PERE PODCAST by QIP: Conversations with Koji Naito [Part 2]

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  • Perspectives

Demographic Shifts and the Rise of Multi-Family Investments in Japan's Housing Market

Tokyo Busy Street

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  • June 27, 2023

Written and contributed by QIP's Marketing Team

For the past two decades, investment opportunities in the Japanese housing market have increased. Japan has the biggest established real estate investment market in attracting a significant portion of investments in the region. Remarkabley, Japan’s multi-family property market has become a prominent asset class and is now the biggest in the Asia Pacific reagrding trasnaction volumes. In a nutshell, the expectations for Japan’s multi-family market this year are encouraging. 

Urbanisation and Positive Net Migration of Major Cities

Generally Osaka and Tokyo have obtained the higest slice of the huge-scale companies per capita. This distribution has resulted in a stream into these leading cities, with residents looking to reap the benefits of fitting labour market conditions. Osaka, Nagoya, and Fukuoka had a net migration that made up 33% of overall Japanese cities’ net migration in 2020. The influx of young adults aged between 20 and 29 (40%) also drove rental demand. 81% of these who are under the age of 29 resort to renting, lowering the home ownership demographic. Yet, increase in the rental market can be credited to both steady wage growth and soaring house prices. Since 2015, house prices have increased by 17.7%, while wages only increased by 1.2% over the same time span. These lifestyle and demographic changes have been prompting demand for multi-family investments. 

Japan multi-family housing as an outperformning asset class

Steady high occupancy rates (>95%) and low (1-2%) but steady rent increases for rental residentials in metropolitan territories have been backed by the persistent arrival of young people to these locations. However, the pandemic altered such a situation in Tokyo, and in 2020 and 2021, Tokyo faced a surprising decrease in population emigration. Notably, the occupancy rate and rent level of rental homes for singles dropped, as students started attending classes remotely, tourists returned to their countries, and hotel and food service businesses cancelled their lease contracts. Occupants of studio-type homes in cities have also relocated to the suburbs due to the extended timespan of work-from-home arrangements.

Nonetheless, Japan’s multi-family has generated greater risk-adjusted returns compared to other subsectors. Historically, multi-family has been less affected by recurrent downturns and was the first subsector to recover from the worldwide economic emergency and the pandemic. With its defensive attributes, institutional capital heavily favours multi-family during such critical times. In the country’s multi-family sector, cap rate compression of 50-80bps is evident in the latest portfolio transactions.

As of 2022’s third quarter, year-to-date residential investments were 8% higher than the same period in 2021, the sole sector that achieved growth across all sectors in real estate. The adverse effects of the pandemic on rental residentials for singles would be wiped out and higher activity levels would continue this 2023, with rent and occupancy growth going back to the pre-pandemic situation in leading cities (Greater Tokyo, Osaka, Fukuoka, and Nagoya).

Since 2015, house prices have climbed to 17.7%, while wages only grew by 1.2% over the same duration. Condominium units also have steep prices nowadays. Besides the rising number of small families, these prices would drive the demand for multi-family units. This event would urge families to rent than buy an asset, further reinforcing the multi-family rental demand.

 

Enhance your portfolio with Japan residential investments, guided by world-class Singapore headquartered private equity

The Japanese market’s stability and predictability are just two of the many reasons why you should invest here. We are QIP, a  a Singapore private equity real estate investment firm with an outstanding track record in the residential living market. With our deep expertise in Japan multi-family investment property market, we can definitely be of great service to you.

If you also have alternative investments in mind, please do not hesitate to reach out to us.

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PERE Trends to Watch Out for in 2023 & 2024

Posted on by qipmarketingaccess

PERE Trends to Watch Out for in 2023 & 2024

  • August 1, 2023

Written and contributed by QIP's Marketing Team

Global predictions imply that economic growth will slow this year due to war, inflation, and increasing interest rates. In the Asia Pacific region, most central banks are trying to avert inflation by strengthening monetary policies. Many believe that a recession can still be adverted, APAC is in a better position globally, where milder inflation and more robust GDP growth continue. Private real estate is well positioned with healthy fundamentals to support stable income going into 2H 2023.

This year, the multifamily housing sector has continued to witness several important trends that investors should closely monitor. Firstly, there be a on-going surge in demand for affordable and workforce housing. As housing affordability remains a pressing issue in many urban areas, PERE firms are increasingly targeting investments in multifamily properties that cater to middle-income and lower-income households. These investments can provide stable cash flow and potential long-term appreciation, driven by the growing need for affordable housing solutions.

In this article, we highlight some of the key trends for 2023 – 2024, with a notable rise in the popularity of alternative investments in the real estate sector. Among these, multi-family real estate and other private equity investments are gaining significant traction.  

Let us dig deeper into last year’s data to fathom which private equity real estate (PERE) trends we are continuing to see.

Japan Multi-Family: A Lucrative Investment Avenue

Japan’s real estate market has been attracting attention from international investors, and the multi-family sector, in particular, is gaining momentum. The country’s ageing population and rising trend of urbanisation have contributed to the growing demand for rental housing. Investors recognise the potential of Japan’s multi-family investment properties as stable income generators and long-term value assets. Additionally, favourable regulations and government initiatives to encourage foreign investment make Japan an attractive market for PERE players.

Multi-Family Investment Property: Capitalizing on Changing Demographics

Beyond Japan, multi-family investment properties especially in the US remain a preferred asset class for PERE investors worldwide. Changing demographics, such as the rising number of millennials and the growing preference for urban living, have fueled the demand for rental housing in various markets. The flexibility and affordability offered by multi-family properties make them an appealing choice for both investors and tenants. As urbanisation continues to reshape cities globally, investing in multi-family properties presents a promising opportunity for generating consistent cash flow and potential capital appreciation.

Private Equity: A Thriving Hub for Investments

Private equity has established itself as a thriving hub for investments in countries like Japan, the United Kingdom (UK), and the United States (US). Each region offers unique opportunities and attractive investment environments for private equity in Singapore firms and investors.

Japan has experienced a significant rise in private equity activity in recent years. With a strong economy, a stable political environment, and a large pool of well-established companies, Japan presents opportunities for, growth capital and buyout investments.

UK’s well-developed financial infrastructure, favourable regulatory environment, and access to global markets make it an appealing destination for private equity firms seeking to deploy capital. London, in particular, serves as a financial centre that attracts both domestic and international private equity players.

The US stands as the largest and most mature private equity market globally. The country’s entrepreneurial culture, technological advancements, and access to skilled labour contribute to a thriving ecosystem for private equity firms.

Alternative Investments: Expanding PERE Horizons

The traditional avenues of real estate investment are transforming, with alternative investment options gaining traction within the PERE sector. These alternative investments include niche asset classes such as student housing, co-working spaces, data centres, healthcare facilities and logistics. Investors will prioritise prime logistics in trade centres and e-commerce countries, a sector currently experiencing historically low level vacancy rates in the UK, US, Germany, Netherlands, France & Spain. As technology continues to reshape various industries, the demand for specialised real estate assets is rising. Investors are increasingly diversifying their portfolios by venturing into these alternative sectors, which offer attractive risk-reward profiles and the potential for high returns.

Real Estate Investment: Embracing Technological Advancements

Technology is revolutionising how we live, work, and invest.

The real estate investment industry is no exception, as emerging technologies such as artificial intelligence, blockchain, and virtual reality are transforming various sectors. PERE investors recognise the importance of adopting technology-driven solutions for efficient property management, market analysis, and investment decision-making. Embracing these advancements enables investors to stay ahead of the curve, optimise operational efficiency, and enhance investment performance.

Access World-Class Global Real Estate Investments with QIP - A Leading PERE Firm in Singapore

The 2023 private equity trends are slowly revealing themselves, but many also fear what the unfamiliar ones may hold. Here at QIP, we know how to identify the best alternative investment opportunities for our clients.. Our real estate investment approach and expertise in residential housing guarantees vigorous deal flow and execution capabilities. And our track record can attest to our strong performance in the industry. Give us a call to learn more about us!

Sources

JLL –  4 bright spots for investors in 2023. Slowing global growth is forcing investors to be more selective on sector deals
Asian Investor – 2023 Outlook: Asia Pacific’s real estate markets
Construction Week Online –  Global real estate investment activity recovery predicted in 2023
KKR Real Estate – Q1 2023 Commercial real estate outlook: setting the stage for opportunities
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PERE PODCAST by QIP: Conversations with Koji Naito

Posted on by Admin
  • Perspectives

Demographic Shifts and the Rise of Multi-Family Investments in Japan's Housing Market

Tokyo Busy Street

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  • June 27, 2023

Written and contributed by QIP's Marketing Team

For the past two decades, investment opportunities in the Japanese housing market have increased. Japan has the biggest established real estate investment market in attracting a significant portion of investments in the region. Remarkabley, Japan’s multi-family property market has become a prominent asset class and is now the biggest in the Asia Pacific reagrding trasnaction volumes. In a nutshell, the expectations for Japan’s multi-family market this year are encouraging. 

Urbanisation and Positive Net Migration of Major Cities

Generally Osaka and Tokyo have obtained the higest slice of the huge-scale companies per capita. This distribution has resulted in a stream into these leading cities, with residents looking to reap the benefits of fitting labour market conditions. Osaka, Nagoya, and Fukuoka had a net migration that made up 33% of overall Japanese cities’ net migration in 2020. The influx of young adults aged between 20 and 29 (40%) also drove rental demand. 81% of these who are under the age of 29 resort to renting, lowering the home ownership demographic. Yet, increase in the rental market can be credited to both steady wage growth and soaring house prices. Since 2015, house prices have increased by 17.7%, while wages only increased by 1.2% over the same time span. These lifestyle and demographic changes have been prompting demand for multi-family investments. 

Japan multi-family housing as an outperformning asset class

Steady high occupancy rates (>95%) and low (1-2%) but steady rent increases for rental residentials in metropolitan territories have been backed by the persistent arrival of young people to these locations. However, the pandemic altered such a situation in Tokyo, and in 2020 and 2021, Tokyo faced a surprising decrease in population emigration. Notably, the occupancy rate and rent level of rental homes for singles dropped, as students started attending classes remotely, tourists returned to their countries, and hotel and food service businesses cancelled their lease contracts. Occupants of studio-type homes in cities have also relocated to the suburbs due to the extended timespan of work-from-home arrangements.

Nonetheless, Japan’s multi-family has generated greater risk-adjusted returns compared to other subsectors. Historically, multi-family has been less affected by recurrent downturns and was the first subsector to recover from the worldwide economic emergency and the pandemic. With its defensive attributes, institutional capital heavily favours multi-family during such critical times. In the country’s multi-family sector, cap rate compression of 50-80bps is evident in the latest portfolio transactions.

As of 2022’s third quarter, year-to-date residential investments were 8% higher than the same period in 2021, the sole sector that achieved growth across all sectors in real estate. The adverse effects of the pandemic on rental residentials for singles would be wiped out and higher activity levels would continue this 2023, with rent and occupancy growth going back to the pre-pandemic situation in leading cities (Greater Tokyo, Osaka, Fukuoka, and Nagoya).

Since 2015, house prices have climbed to 17.7%, while wages only grew by 1.2% over the same duration. Condominium units also have steep prices nowadays. Besides the rising number of small families, these prices would drive the demand for multi-family units. This event would urge families to rent than buy an asset, further reinforcing the multi-family rental demand.

 

Enhance your portfolio with Japan residential investments, guided by world-class Singapore headquartered private equity

The Japanese market’s stability and predictability are just two of the many reasons why you should invest here. We are QIP, a  a Singapore private equity real estate investment firm with an outstanding track record in the residential living market. With our deep expertise in Japan multi-family investment property market, we can definitely be of great service to you.

If you also have alternative investments in mind, please do not hesitate to reach out to us.

More Insights

Demographic Shifts and the Rise of Multi-Family Investments in Japan’s Housing Market

Posted on by qipmarketingaccess
  • Perspectives

Demographic Shifts and the Rise of Multi-Family Investments in Japan's Housing Market

Tokyo Busy Street

Tweet Share Share Email

  • June 27, 2023

Written and contributed by QIP's Marketing Team

For the past two decades, investment opportunities in the Japanese housing market have increased. Japan has the biggest established real estate investment market in attracting a significant portion of investments in the region. Remarkably, Japan’s multi-family property market has become a prominent asset class and is now the biggest in the Asia Pacific regarding transaction volumes. In a nutshell, the expectations for Japan’s multi-family market this year are encouraging. 

Urbanisation and Positive Net Migration of Major Cities

Generally Osaka and Tokyo have obtained the higest slice of the huge-scale companies per capita. This distribution has resulted in a stream into these leading cities, with residents looking to reap the benefits of fitting labour market conditions. Osaka, Nagoya, and Fukuoka had a net migration that made up 33% of overall Japanese cities’ net migration in 2020. The influx of young adults aged between 20 and 29 (40%) also drove rental demand. 81% of these who are under the age of 29 resort to renting, lowering the home ownership demographic. Yet, increase in the rental market can be credited to both steady wage growth and soaring house prices. Since 2015, house prices have increased by 17.7%, while wages only increased by 1.2% over the same time span. These lifestyle and demographic changes have been prompting demand for multi-family investments. 

Japan multi-family housing as an outperformning asset class

Steady high occupancy rates (>95%) and low (1-2%) but steady rent increases have been backed by the persistent arrival of young people to these locations. However, the pandemic altered such a situation in Tokyo, and in 2020 and 2021, Tokyo faced a surprising decrease in population emigration. Notably, the occupancy rate and rent level of rental homes for singles dropped, as students started attending classes remotely, tourists returned to their countries, and hotel and food service businesses cancelled their lease contracts. Occupants of studio-type homes in cities have also relocated to the suburbs due to the extended timespan of work-from-home arrangements.

Nonetheless, Japan’s multi-family has generated greater risk-adjusted returns compared to other subsectors. Historically, multi-family has been less affected by recurrent downturns and was the first subsector to recover from the worldwide economic emergency and the pandemic. With its defensive attributes, institutional capital heavily favours multi-family during such critical times. In the country’s multi-family sector, cap rate compression of 50-80bps is evident in the latest portfolio transactions.

As of 2022’s third quarter, year-to-date residential investments were 8% higher than the same period in 2021, the sole sector that achieved growth across all sectors in real estate. The adverse effects of the pandemic on rental residentials for singles would be wiped out and higher activity levels would continue this 2023, with rent and occupancy growth going back to the pre-pandemic situation in leading cities (Greater Tokyo, Osaka, Fukuoka, and Nagoya).

Since 2015, house prices have climbed to 17.7%, while wages only grew by 1.2% over the same duration. Condominium units also have steep prices nowadays. Besides the rising number of small families, these prices would drive the demand for multi-family units. This event would urge families to rent than buy an asset, further reinforcing the multi-family rental demand.

Enhance your portfolio with Japan residential investments, guided by world-class Singapore headquartered private equity

The Japanese market’s stability and predictability are just two of the many reasons why you should invest here. We are QIP, a a Singapore private equity real estate investment firm with an outstanding track record in the residential living market. With our deep expertise in Japan multi-family investment property market, we can definitely be of great service to you.

If you also have alternative investments in mind, please do not hesitate to reach out to us.

 

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