Octopus Real Estate, part of Octopus Group and a leading UK specialist real estate investor, has agreed to provide a £21 million development finance facility to deliver a 315-bed Purpose Built Student Accommodation (“PBSA”), in the heart of Glasgow city centre.
Located on New City Road, the development is well situated to house students from the five principal education establishments; the University of Glasgow, the University of Strathclyde, Glasgow Caledonian University, Glasgow School of Art and the Royal Conservatoire of Scotland. The main university in the city, the University of Glasgow, is located one mile to the west and can be reached by public transport within five minutes via the subway. The development is also within walking distance of four key train stations; Glasgow Central, Queen Street, High Street and Argyle Street.
Bricks Capital has previously completed several PBSA developments in Glasgow, Edinburgh and Aberdeen. This accommodation block is due for completion, and will welcome its first students, for the start of 2020 academic year.
The loan highlights the Octopus Real Estate focus on the PBSA market. The last 12 months has seen Octopus Real Estate fund £150m of PBSA deals, including projects in Coventry, Bristol, Leicester, Liverpool and now Glasgow.
Recent research by Octopus Real Estate revealed the significant difference student accommodation has on academic performance and mental and physical health1. It also revealed that today’s students expect more from their accommodation and are willing to pay more to get it. Of the students surveyed:
- 76% said they would pay more rent – at an average of £115 extra per month – for a private bathroom
- 68% would pay an average of £92 extra per month to have their own cooking facilities
- 57% would be prepared to pay an extra £79 per month, on average, for a gym as part of their accommodation.
The appetite for these facilities gives room for developers to expand plans and deliver better, affordable, PBSA to more students.
Gavin Eustace, Head of Development at Octopus Real Estate, said:
“The PBSA sector is growing and offers a huge opportunity for developers who are willing to listen to and respond to students’ needs and demands. Bricks’ scheme in Glasgow is a prime example of a quality PBSA development that will create environments that will support students in their academic performance as well as enhance their university experience.
“Octopus Real Estate champions growth of the PBSA sector. We make some of our biggest development loans in this sector, which has grown into the mainstream over the past decade and is no longer deemed ‘alternative’.”
Peter Prickett, Bricks Capital, commented:
“Glasgow is an obvious choice for a high-quality student accommodation scheme. With several key institutions nearby, and brilliant transport links, New City Road is the ideal location for the development. We see the opportunity and growth within the PBSA market and are pleased to have worked alongside Octopus Real Estate who share our vision and values.”
SFG Partners LLP acted for the borrower.
To read more on the student accommodation impact report please see here.
1 This research was conducted online from 30th April to 9th May 2019 by FTI Consulting’s strategy & research team with n=1,105 students (aged 18 to 25 years old), who presently attend, or have completed an undergraduate degree in a British university.
Results were weighted to be reflective of Higher Education Statistics Agency 2017 figures for gender, university attended and region of students’ origin.
