CARLYLE Group, the private equity firm known for its large-scale investments in the defence industry, yesterday sealed a joint venture deal with Generation Estates, kickstarting its next big push in the student accommodation sector.
Carlyle, led by co-founder David Rubenstein, and Generation said they had acquired one site in Highbury and Islington and are progressing work on a further three sites in London, to build an initial portfolio worth around £350m.
The private equity giant believes student housing is an attractive long-term investment proposition due to excess demand and a shortfall of supply, particularly in London. There are currently over 260,000 full time students in the capital, yet purpose-built accommodation can only cater for around 16 per cent of them.
The excess demand has led to long-term average rental growth of around seven per cent – a figure which grew to 10 per cent in 2009, Carlyle said.
The firm expects the number of post-graduate and overseas students - a group which tends to favour secure purpose-built accommodation – to grow by around 15 per cent over the next couple of years. But it said current supply will struggle to keep up, with only 4,000 new beds due for delivery between 2010 and 2012.