BridgePoint Ventures invests in Glasgow student accommodation project

Boutique property investment firm BridgePoint Ventures has invested £2.6 million in a student accommodation scheme in the heart of Glasgow, just a short walk from Glasgow University. BridgePoint Ventures has partnered with Seaforth Properties and Union Hanover Securities to help deliver the 12,900 sq ft project, which will convert a redundant petrol station into a five-storey purpose-built student accommodation scheme.

When complete, the £9 million scheme, to be known as Kelvin Grove, will provide 116 studios and apartments on the upper floors, with retail on the ground floor.

Eric Jafari, CEO of BridgePoint Ventures, said:
“According to research conducted by Jones Lang LaSalle, in 2010 the UK had 1.54m students and only 150,000 purpose built student accommodation units. With this in mind, we began to dip our toe into the student housing sector and our intention is to slowly increase our exposure. Currently, the total development pipeline, including refurbishment, will only account for approximately 2% of full time student numbers, so we see this as a considerable investment opportunity.

“Over the past two years, rental growth in the student-housing sector has averaged 3-5% nationally, consistently above other sectors, and we do not see this trend changing soon. Furthermore, with an increase of 68% in overseas students in the past decade - another trend that appears set to continue - the market continues to look remarkably robust.

“The student accommodation market continues to provide a recession-proof return to investors and our focus will be on partnering with seasoned mid-sized developers with experience in Russell Group locations when new opportunities arise. As investors, we like the fact that the credit risk of the income is diversified. Instead of relying on the covenant strength of a single entity, each student - and their family- is acting as a sub-tenant and thus the likelihood of mass default is negligible.

“When considering sites for student accommodation, location is key. Students are more sensitive than most when it comes to proximity to the facilities they use daily. The reason why we invested in Kelvin Grove is because it ticks all the boxes.”

Kelvin Grove is BridgePoint’s second student accommodation project in the past two years, following their £6.5m equity investment in Enterprise House in Leicester in 2011.