Far East Orchard (FEOrchard), the listed arm of Far East Organization, is expanding its property development business beyond Singapore with the acquisition of four student accommodation properties within Shieldfield, Newcastle upon Tyne in the UK for £40.9 million.
The property acquisitions are being funded by internal sources and/or external debt facilities, and comprise: Turner Court, an existing student accomodation; Rosedale Court, an ongoing development which is expected to complete in the second half of 2015; and two land sites for development.
All are freehold properties located within proximity to educational institutions such as Newcastle University.
Student accommodation is the group’s latest asset class within its property development portfolio, presenting an opportunity to diversify its business.
The sector is also increasingly becoming one of the fastest growing real estate investment opportunities in the UK.
Data from Real Capital Analytics shows that the average investment yield for UK student accomodation was 5.8 percent, compared to 5.1 percent for offices.
“As the UK student accommodation market has been structurally undersupplied, we plan to contribute and provide high quality purpose built student housing. In addition, this new asset class opens a door to stable capital growth in one of Europe’s major property markets for FEOrchard,” said Group CEO Lui Chong Chee.
In the past year, FEOrchard has purchased four hotels in Germany and Denmark for €21.0 million. The group also entered into a residential development joint venture project in Sydney, Australia.
Image: Artist’s impression of Rosedale Court, a brand new student development due to open in 2015.
Romesh Navaratnarajah, Singapore Editor at PropertyGuru, wrote this story. To contact him about this or other stories email romesh@propertyguru.com.sg
