One asset class has demonstrated its resilience during the recent economic turbulence. Student accommodation funds have remained a robust investment, and have emerged as a sector of the property market in their own right. A growing number of investors are attracted to their strong fundamentals which provide a secure income stream.

Student numbers are increasing each year due to record exam results at home and a greater influx of overseas students. Universities need quality accommodation to attract their share of students, and currently there is a significant undersupply. The emergence in recent years of private student accommodation initiatives has been the result. Private operators are now working with universities to purchase and develop their existing stock, or to build new. As an investment, the sector presents a compelling proposition. Demand for beds continues to outstrip supply; bad debts are low; occupancy is high and students pay their rent (which increases each year), in advance.

Only 9% of students in UK are currently housed in private accommodation. There are some eight million students in the main EU countries, and only 13% are in purpose-built accommodation. Student accommodation is being seen as the single largest, untapped real estate market in Western Europe. Universities will continue to work in partnership with the private sector to provide suitable modern accommodation. This creates an attractive investment opportunity which benefits universities, students and investors, alike.

Outsourcing accommodation frees universities to concentrate on their core educational activities. Students benefit from the increased availability of modern rooms with en suite facilities, internet access, security and parking. Investors are able to participate in this opportunity through a number of investment schemes that have emerged in recent years. We have written about the virtues of the Brandeaux Student Accommodation Fund in past issues. It continues to perform well in all currency denominations, and still hasn’t posted a losing month.

Another such Fund that I’ve reviewed is the Coral Student Portfolio Fund. This offering presents a lower risk profile, and targets returns in the range of 8-10% net per annum. As a fund of funds, it invests in established UK schemes and providers. Unlike Brandeaux, it’s positioned to benefit from the enormous opportunities emerging in Western Europe. By spreading exposure the Fund aims to maximise returns and minimise dependency on one single provider.

The Coral Student Portfolio is authorised and regulated in Luxembourg. It’s managed by ex- Brandeaux colleagues Robert MacDonnell and John Kennedy, who were both involved in the market’s first ever student accommodation fund in 2000.

I spoke to Kennedy recently and he said, “The fundamentals of this asset class are still very strong. The volatility of the markets creates the ideal opportunity, and we have been able to formulate a liquidity strategy to meet the immediate market environment. At the same time we are well placed to capitalise on opportunities, as the dust settles on the recent turmoil in the markets.”

The Coral Student Portfolio was launched in March 2009 and is currently up 15%. It’s available in GBP, USD and Euro denominations.

The Coral Student Portfolio has a unique strategy offering for investors:

• Exposure to an asset class with demonstrably strong fundamentals, low bad debts,
• favourable supply/demand imbalance and high occupancy levels.
• Access to a diverse range of student accommodation.
• Funds generally are only available institutionally.
• It’s a secure EU regulated fund based in Luxembourg, with Deutsche Bank as external
• administrators. It’s advised by FSA regulated student accommodation specialists Ingman Jones LLP.
• It’s available direct or through all major insurance company PPBs, QROPS and SIPPs.