SPH's student beds sell out as Chinese flock to UK universities

Its Southampton property, which had 526 beds, had all rooms sold out in May 2019.

Beds are selling out in Singapore Press Holdings’ (SPH) purpose-built student accommodation (PBSA) assets in the UK. According to UOB Kay Hian, SPH’s portfolio acquisitions made in April 2019 have already had a substantial amount of beds sold out for the school term.

Its largest PSBA, the 526-bed Hampton Square at Southampton, had all room types sold out when they were launched in May 2019.

SPH could be benefitting from the Education Ministry of China’s official warning to Chinese citizens asking them to undertake risk assessment before attempting to get US visas, as some Chinese students have faced issues in visa application and extension, according to UOBKH analyst Lucas Teng China is the largest source of international students in the US, accounting for around 31% of the total, according to the US Department of Homeland Security.

Moreover, UK universities have seen a marked increase in Chinese undergraduate students, with enrolment increasing by up to 9% in 2017/2018, according to Higher Education Statistics Agency (HESA), in contrast to a decline seen by US universities, a reversal of the growth trend prior to the Trump administration.

Teng commented, “Compared to competition in the area, the asset’s customer ratings are also higher, with better reviews commenting on their more premium quality and service. We believe the assets in the April 2019 acquisition are likely to be more sustainable in the long term, given on par or better popularity amongst competition in the vicinity.”

SPH also refinanced a $316.75m (£205m) term on 3 June 2019 to a longer tenure of four years. According to Teng, this “demonstrates SPH’s commitment to invest long term in UK student accommodation assets.”

SPH’s recent PBSA assets are proving to be more premium quality accommodation, revolving around upper mid-tier universities, the analyst said. “These are likely to be more sustainable, and possibly allow it to ride on the wave of Chinese student growth.”

According to UOBKH, SPH’s current acquisitions in PBSA amount to $20m in estimated net profits and growth may be expected upon further acquisitions.