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Investment in student accommodation soars to record £2bn

The sector is also witnessing larger deals than ever before. During the past 15 months, the market has seen five £100million+ transactions. Prior to Q3 2011, no single deal had exceeded £85million. The University Partnerships Programme (UPP) Regional Portfolio typifies this – Dutch pension fund manager PGGM invested in a 60% stake in UPP’s assets this year, worth an estimated total of £840million.

Jo Winchester, Head of Student Advisory, CBRE, said: "Total returns remains a key driver for investors, as they flock towards the impressive returns given by student accommodation for a second year in a row. Our data shows that student accommodation is outperforming other asset classes by some margin, as it has brought 9.6% returns in the year to September 2012. This compares to 5.4% for all offices and 2.2% for all retail in the year to August 2012."

The increase in university fees has made a difference to the number of students attending university in 2012/13. CBRE’s research also indicates that a low number of students deferring from last year; the lower than expected number of AAB students; and changing demographics have all contributed to a decline in student numbers, yet investors remain undeterred.

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