A Bahraini real estate firm has turned to Islamic finance to fund its latest asset acquisition in the UK, a mark of the sway the UK property market has on Shariah investors. VINEETA TAN reports.
With a AED124 million (US$33.75 million) Islamic structured financing provided by Abu Dhabi Islamic Bank (ADIB), Blacksand purchased a purpose-built student accommodation (PBSA) asset in Kingston-upon-Thames. Completed in 2018, the property comprises 300 fully furnished units across 111 studios and 189 ensuite cluster bed spaces. The property also has a retail unit on the ground floor leased to Europcar for an unexpired lease term of eight years.
“The appetite among our GCC investors remains strong for quality UK real estate, particularly assets that have demonstrated resilience during the pandemic, with underlying strong fundamentals. Despite the unparalleled uncertainty during the last academic cycle, investors continue to view the UK PBSA sector favorably. The market has performed stronger than expected throughout the crisis, with reports of robust booking and occupancy rates. This was reflected on the subject property, which maintained 95% occupancy during the 2020/21 academic year and has secured 100% bookings for 2021/22,” shared Paul Maisfield, the head of UK real estate at ADIB.
Sector analysts are cautiously optimistic about PBSA despite COVID-19 uncertainty, expecting demand to continue to grow over the next few years, banking on the government’s intentions to double international student enrollment. “The allure of British education continues to appeal, and overall the reputation of PBSA as a counter-cyclical asset class remains at the forefront of its attraction to investors,” said Maisfield.
According to real estate firm CBRE, over EUR9.2 billion (US$10.8 billion) was invested in PBSA across Europe including the UK in 2020, the highest year on record. Despite the pandemic, transactions for up-and-built assets increased.