ENBD Reit buys Dubai’s first purpose-built student block

Following its purchase, ENBD Reit will lease the building back to Global Student Accommodation on a seven-year lease.

A real estate investment trust (Reit) has bought the UAE’s first purpose-built student accommodation (PBSA) block in a deal worth Dh120 million.

ENBD Reit, which was launched by Emirates NBD and listed on Nasdaq Dubai in March, said it had acquired the Uninest block in Dubai Academic City under a sale and leaseback agreement with the building’s developer and operator, Dubai-based Global Student Accommodation (GSA). It has signed a seven-year lease on the building.

Uninest Dubailand opened its doors last year and is the first of several PBSA blocks that GSA is looking to develop in the region.

It is a 160,000 square feet building with 242 rooms with 424 beds on nine upper floors. There is also a gym, entertainment room, cinema room, study area, a cafe and a rooftop pool.

Tim Rose, the head of Real Estate at Emirates NBD Asset Management, said: “This is an important step in our capital deployment programme and a key milestone for the process of diversifying our portfolio beyond traditional asset classes. As GSA plans to grow its presence in Dubai and the UAE, we are looking forward to a strategic partnership that will allow both parties to support the growth of the Emirates’ education sector.”

Following its deal, ENBD Reit now has a total value of US$349m, and a net asset value of $297m. Its portfolio also includes four office towers (Al Thuraya 1 in Dubai Media City, Burj Daman in DIFC and two buildings in Dubai Healthcare City) and three residential towers, with occupancy rates at 86 per cent.

GSA is headquartered in Dubai but has student properties in Australia, China, Germany, Ireland, Japan, the UAE and the UK.

The market for purpose-built student accommodation has developed into a major asset class over the past 20 years. Its development has been most prominent in the UK, but its fortunes took a battering in this market last year due to the uncertainty surrounding Brexit – not only in terms of its effect on property values but also on the potential for greater restrictions to be placed on overseas student numbers.

A study published earlier this month by Savills said that the value of student homes traded in the UK dropped by 24 per cent last year to £4.5 billion (Dh21.2bn) from a record £5.9bn in 2015. However, the market is expected to recover this year, with Savills forecasting an 18 per cent growth in investment numbers to £5.3bn.

Of the £4.5bn invested last year, 60 per cent came from outside the UK. Almost £1.4bn was invested from North America, nearly £1.2bn came from Asia and £300m came from the Middle East. More than half of the Asian investment was made via Singapore-based sovereign wealth fund GIC through a joint venture with GSA.

Paul Tostevin, an associate director in Savills’ research division, said: “GIC’s £700m investment in UK student housing is a vote of confidence in the sector from one of its most experienced investors.”

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