Islamic investors capitalize on upswing in UK student housing market (By IFN)

UK: Investments in student accommodation in the country surged to almost GBP800 million (US$1.25 billion) in the first half of this year, in a boom that Shariah compliant investors have been quick to capitalize on.

According to research by CBRE, a global real estate services firm, investments in the sector during the period rose more than twofold from the first half of 2011, as the UK remains a hot favorite for higher education and amid a shortage of student housing in the country.

Islamic investors have scrambled to join the party, with Bahrain’s Tadhamon Capital already making its third investment in UK student accommodation through a GBP45 million (US$70.28 million) acquisition of a student housing development in central London. Tadhamon partnered London-based Shariah compliant real estate investment firm Apache Capital Partners to complete the deal via a joint venture with UK real estate investment and development firm, McLaren Property.

The development, known as Paris Gardens, is set for completion in September 2013. The transaction is part of Tadhamon and Apache’s social infrastructure investment platform which has gross assets under management of US$140 million.

The Paris Gardens deal was completed at a net initial yield of 6.4%; and will distribute average quarterly net cash yields of 7.3% per year, after paying out 6% during the development’s first year of construction and 8% per year thereafter.

In a statement, Waleed Abdulla Rashdan, CEO of Tadhamon, noted that the strong performance of the firm’s previously acquired UK assets, comprising the purchase of a special needs school in 2010 and a purchase of a 50% stake in housing at University Campus Suffolk in Ipswich, reinforces Tadhamon’s belief in the sector and its resilience amid economic turmoil.

“Over the coming 12 months, we are committed to complete a number of relatively advanced transactions in our pipeline that will target to deliver secured distributions of 6-8% per annum to our investors.

“These include a joint venture social housing within some major UK cities and additional student accommodation properties in top-rated university cities,” he said.

See: http://redmoney.newsweaver.co.uk/1njgq4h1jadh38rwoni3wx?email=true&a=6&p=26493615&t=21788145