News - 21st April 2017 - (Straitstimes)
GIC and Mapletree Investments are going back to school.
Singapore's sovereign wealth fund and the real estate investor helped fuel a record US$16.2 billion (S$22.6 billion) of student housing acquisitions this year, and a further US$3.3 billion of deals were struck in the first quarter of this year, according to Real Capital Analytics.
Student accommodation offers better returns than offices and residential housing, making it an attractive asset for pension and sovereign wealth funds looking for stable income and higher yields.
"Investments in student accommodation have shown higher yields than other real estate classes over recent years, while volatility was lower," said global head of investment management Struan Robertson of Global Student Accommodation Group. "Their performance is not correlated to other real estate investments. They're recession-proof and a great diversifier in any portfolio."
Asian investors are leading the charge, accounting for a record 21 per cent of student housing deals last year, up from just 1 per cent in 2015, data from Real Capital showed.
Singapore's sovereign wealth fund last month partnered with Canada Pension Plan Investment Board and real estate operator Scion Group to invest in a US$1.6 billion portfolio of student housing in the United States, adding to the US$1.3 billion acquisition of University House Communities Group last year.
GIC also partnered with Dubai- based GSA to invest in student accommodation in Germany and the United Kingdom last year.
"From a total portfolio perspective, student housing provides both defensive and diversification benefits from other traditional property sectors as it is less volatile and dependent on the economic cycle," said Mr Lee Kok Sun, chief investment officer of real estate at GIC. "Finding the right product and partner to invest with has been key to our approach but also the biggest challenge."
Mapletree Investments made its first foray into student accommodation in March last year when it acquired 25 properties in the United Kingdom.