CBRE: Investment in student housing reaches 2.37 billion

08 December 2014 Consultancy.uk

Investing in UK student accommodations is considered a reliable form of investment as the demand for higher education in the UK remains steady and the supply constrained, says consulting firm CBRE. For the third year in a row, investments in student housing broke through the £2 billion mark, reaching £2.37 billion in 2014. 

Global property advisor CBRE recently released new research into the investment in UK student accommodation. Not only does this research show that total investment in student accommodation in the UK has broken the £2 billion mark for a third consecutive year, it also highlights that the profile of investors in student housing has shifted in 2014.

CBRE research into UK student accommodation

Total UK investment in student housing increased this year from £2.2 billion in 2013 to £2.37 billion this year. Of this, 35% is being invested in London property compared to 12% in 2013. “Increased activity in London can in part, be attributed to strong rental growth prospects due to constrained supply. Student housing is seen as attractive to investors as it offers relatively high yields compared to other Central London property and is available for a lower capital value per square feet,” explains Jo Winchester, Head of Student Housing Advisory at CBRE.

Profile student housing investors

The research shows that the profile of the investors has changed considerably between 2012 and 2014. While in 2012, the biggest portion of money invested came from private equity organisations, followed by long leased institutions and sector fund retail, in 2014, these investments decreased significantly and new investment players took over. A big portion of the investments came from non-UK operators, direct let institutional investors, both barely present in 2012, with institutional investors, such as La Salle, Henderson, Blackrock and Pramerica, purchasing single assets of between £12million and £60million. “Institutional investors, who previously would only consider long leased product or indirect investment, have made a number of purchases of direct let, directly owned assets. This is a dramatic shift from 2012, when the direct let institutional investor hardly registered in the market,” says Winchester. “Now, with such a varied list of investors interested in this sector, UK student housing is arguably the most advanced of “alternative” assets, offering investors an “easy to understand” opportunity.”

Jo Winchester - CBRE

As the number of new undergraduates is the highest ever for the 2014/15, investing in student accommodations is seen as a reliable form of investment. “This type of continuous, stable demand for higher education in the UK has led to student accommodation becoming a reliably performing asset class. With a number of portfolio deals currently available, 2015 promises to be another big year for investment,” concludes Winchester.

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Ensuring data quality imperative for smart asset management

25 March 2019 Consultancy.uk

By implementing innovative Asset Performance Management systems, utilities firms can maximise their utilisation of assets and minimise maintenance costs across their portfolio. However, according to Louis Morgan of Smart Grid Forums, without securing quality management systems for the data which smart grids rely upon, companies risk missing out on the benefits of asset performance grids.

Smart asset management presents a major opportunity to professionals across the business spectrum. In this context, a new event hosted in London is looking to help smart-grid asset management professionals meet the needs of a changing energy industry with digital asset management. The first annual Grid Asset Management event is due to take place between the 14-16th of May 2019 at the Millennium Hotel in Knightsbridge, London.

The conference will bring together leaders and experts from across Europe, in order to benchmark their digitalisation roadmaps. In a piece posted on the Smart Grid Forums website ahead of the event, Louis Morgan, a Conference Producer at Smart Grid Forums, has outlined the importance of investing in innovative asset performance technology for utilities firms, which can help ensure long-term stability for assets management in the utility sector in the face of increased complexity  .

Ensuring data quality imperative for smart asset management

Traditionally, the decision to invest in a given asset was made on the basis of an expert’s judgement of the risks posed by its failure, having typically been assessed via a risk matrix or a similar qualitative method. After that, a decision would be taken as to whether it should be replaced. However, according to Morgan, as the pace of change and complexity increases, these methods can no longer provide the required level of certainty. Uncertainty about changes to consumption patterns and load profiles brought on by the energy transition produces a vast number of possible scenarios that investment planners must consider.

As a result, Morgan explained, “utilities are seeking to support their investment decisions with quantitative risk management methods, centralising expertise from across their operations into a consistent, numerical framework that accurately captures the risk posed by all kinds of asset failure to all stakeholders.”

Companies are doing this by turning to ‘smart grid’ utility management, or systems which work to invest in the maintenance and replacement of millions of assets spread across thousands of kilometres of network. However, this is by no means a silver bullet, and in the age of the smart grid, planning ahead is more complex than ever. To ensure the long-term stability of their grids, then, utilities must deploy standardised investment decision-making practises supported by advanced modelling capabilities.

Morgan elaborated that the best way of facing this problem is through the combination of condition, utilisation, reliability and demand data. In that case, risks can be quantified in financial terms and investment budgets can target the assets posing the highest total risk, thus deferring investment in lower risk assets and optimizing the long-term budget. However, decisions informed by these risk models “will only be as good as the data and the assumptions that support them”, meaning utilities must therefore find ways to improve the volume, variety, veracity and velocity of the data they employ in their investment planning models.

“This means digitalizing asset operations, rolling out sensors and implementing systems that integrate data from a range of internal and external sources in real-time,” Morgan expanded. “Utilities must also scour their business for expertise about different assets to ensure that their risk management frameworks accurately capture the true risks posed by asset failures.”

This is in keeping with a trend which goes well beyond utilities. Business leaders of all shapes and sizes are currently having to address how they manage data quality – as poor information being input into any automated system can essentially negate the efficiencies such systems bring to the table. To this end, robust data governance is critical.

Concluding his article, Morgan said, “It is clear that there is a great deal of opportunity for utilities to obtain significant business benefits from improving their investment planning capabilities. More accurate risk management, supported by a reliable data-driven method, will deliver better financial outcomes from investment activity... But to achieve these capabilities, a lot of work must be put in to establish the systems, processes and frameworks which underlie them. Utilities must also make difficult choices about how they quantify risk and the appropriate range of data to feed into their investment planning models.”

This topic will be tackled in-depth at this year’s Grid Asset Management 2019, a conference, exhibition and networking forum aimed solely at smart grid asset management professionals.