Glasgow research

UNDERSTANDING THE GLASGOW STUDENT PROPERTY MARKET

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VITA STUDENT CONDUCTS EXTENSIVE RESEARCH OF THE SUPPLY AND DEMAND TRENDS AND WIDER ECONOMIC ISSUES EVIDENT IN EACH OF THE UK’S MAJOR UNIVERSITY CITIES. This document provides an overview of Glasgow’s strong investment potential and offers investors a concise evaluation of the present market and its future direction.

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Vita Student Glasgow | Select Property Group

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SCOTLAND AND GLASGOW

GLASGOW HOLDS AN ELITE STATUS WITHIN THE UK’S UNIVERSITY SECTOR. IT’S SCOTLAND’S LARGEST CITY, HOME TO ONE OF THE BIGGEST STUDENT MARKETS IN EUROPE AND INDEPENDENTLY HIGHLIGHTED AS A TOPTIER INVESTMENT OPPORTUNITY.

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Vita Student Glasgow | Select Property Group

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PROUD STUDENT HISTORY

The Glasgow School of Art designed in 1896 by Scottish architect Charles Rennie Mackintosh.

Historically, access to education has been a defining characteristic of Scotland and it is now one of the country’s proudest traditions. As early as the 16th century, several Scottish universities had been established. In just two cities – Glasgow and Aberdeen – Scotland had more universities than the whole of England and by 1750, the emphasis on education meant 75% of the population was literate, one of the highest rates in Europe.

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Vita Student Glasgow | Select Property Group

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TOP-TIER INVESTMENT OPPORTUNITY

THE DRIVERS OF GROWING STUDENT DEMAND

GLASGOW HAS BEEN IDENTIFIED AS A PRIME INVESTMENT OPPORTUNITY BY SAVILLS, PROPERTY CONSULTANCY. IT WAS ONE OF ONLY FIVE UNIVERSITY CITIES ELEVATED TO THE TOP TIER OF ITS RANKINGS LIST OF OVER 70 LOCATIONS.

FREE TUITION AND FOUR-YEAR COURSES

This shows that Savills independent research, assessing factors such as supply and demand, international appeal of universities and future prospects, has deemed Glasgow one of the lowest risks investments in the UK.

The investment appeal of Glasgow’s student housing market is built upon a foundation of dependable demand. Glasgow is Scotland’s largest city and houses six universities. Only London has more universities in the UK.

UK Cities

Number of higher education providers

London

30

Glasgow

6

Manchester

5

Birmingham

5

Leeds

4

Edinburgh

4

Oxford

3

All these universities attract a student market of around 80,000 students. With a total population of just less than 600,000 that means around one person in every seven is a student.

Students from all over the world want to be educated in the UK and Scotland offers many undergraduates the chance to do this free from tuition fees.

10% OF STUDENTS IN SCOTLAND TRAVEL FROM OUTSIDE THE EU

Student

Fee status

Scottish

Free tuition

Rest of the UK

Fees apply

Non-UK EU

Free tuition

Rest of the world

Fees apply

With no fees to pay, students in Scotland have some of the highest disposable income in the world and Scottish universities are very popular.

Even before the 2012 tuition fee rise in England, the domestic higher education participation rate in Scotland was 56%, seven percentage points higher than in England, while last year’s figures from university admissions company Ucas suggest English students are increasingly favouring Scottish universities. Almost 29,000 applied for places north of the border in 2013, which is a 14% rise on the year before.

80,000

10%

Almost 7% of students in Scottish universities originate from non-UK EU countries. The figure represents and recent annual increase from 18,640 to 19,750 undergrads and is four percentage points higher than England. Furthermore, 10% travelled from non-European nations.

It is also imperative to understand that Scotland’s universities generally offer four-year undergraduate degree courses, believing it allows students to acquire skills that make them attractive to employers. This means that an accommodation provider capable of delivering an exception experience in a student’s first year may see a customer rebook three times through their degree duration.

STUDENT MARKET OF AROUND 80,000 STUDENTS 8

Vita Student Glasgow | Select Property Group

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THE DRIVERS OF GROWING STUDENT DEMAND WORLD-CLASS UNIVERSITIES

UNIVERSITY OF GLASGOW

Underpinning the 80,000-strong student market is a collection of six universities – all of which are prominent on the global stage.

University of Glasgow Established in 1451, the University of Glasgow is the fourth-oldest university in the English-speaking world and one held in the highest esteem.

The latest QS World University rankings list it as the 55th best university in a list of over 700, making it the ninth best in the UK and fourth best outside of London and Oxbridge. The University of Glasgow was a founder member of the prestigious Russell Group of 24 leading UK research universities and is also a founder member of Universitas 21 – an international grouping of universities aiming to set new standards for higher education.

Furthermore, the institution is a major research centre. As a member of the International Research Universities Network it commands an annual research budget of £181 million and has a staff of 2,000 active researchers.

With such a strong global gravitas, the university is attractive to both domestic and international students. More than 18,000 undergraduates and 7,000 postgraduates from over 130 countries worldwide study at the university each year and there are 6.6 applicants per place.

Student enrolment figures at University of Glasgow: Academic year

International

Total

12-13

3,332

26,635

11-12

3,128

26,296

10-11

2,824

26,551

09-10

2,292

25,598

08-09

2,070

24,242

07-08

1,800

23,732

2014 NOMINATIONS: TIMES HIGHER EDUCATION UNIVERSITY OF THE YEAR AWARD – OUTSTANDING SUPPORT FOR EARLY CAREER RESEARCHERS – INTERNATIONAL COLLABORATION OF THE YEAR – OUTSTANDING CONTRIBUTION TO INNOVATION AND TECHNOLOGY

University of Glasgow, the East Quadrangle of the Main Building

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Vita Student Glasgow | Select Property Group

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The international appeal of a university is important from an investment perspective. The overseas student market is a source of growing demand for university places and ultimately student accommodation. The total number of intentional students studying at the University of Glasgow has almost doubled to 3,332 in the past five years.

Even back in 2012, the UK government estimated overseas students studying at higher education institutions in the UK paid £3.9 billion in tuition fees and spent £6.3 billion on accommodation and other living expenses. The Department for Business, Innovation and Skills expects these amounts will continue to rise as the number of international students increases by 20% over the next five years.

Speaking in summer 2013, Professor Neal Juster, Vice-Principal of Strategy and Resources at the University of Glasgow, said international student fee income would rise incrementally from £52.2 million in 2012-2013 to £80 million in 2016-17, which is an increase of £27.8 million and 53% in total.

The University of Glasgow has continually invested to ensure it pulls in students from around the world. Since 2001, the institution has outlaid £300 million to construct new facilities and plans are in place to invest £160 million more over the coming years.

UNIVERSITY OF GLASGOW’S OVERALL IMPACT ON SCOTLAND’S GDP:

£509m 0.5% 1.6% 3.2% 12

UNIVERSITY OF GLASGOW FACTS: FAMOUS ALUMNI INCLUDE THE FATHER OF ECONOMICS ADAM SMITH, RENOWNED PHYSICIST AND ENGINEER LORD KELVIN AND PIONEER OF TELEVISION JOHN LOGIE BAIRD – ALBERT EINSTEIN CONDUCTED LECTURES ON THE ORIGINS OF THE GENERAL THEORY OF RELATIVITY THERE – EXPANDED ACROSS INTERNATIONAL BOUNDARIES TO CREATE THE SINGAPORE INSTITUTE OF TECHNOLOGY – 1,300+ UNIVERSITY COURSES – INTERNATIONAL STUDENT BAROMETER 1ST WITH 89% IN RUSSELL GROUP FOR OVERALL SATISFACTION

OF THE GDP OF SCOTLAND

OF THE GDP OF THE WEST OF SCOTLAND

OF THE GDP OF GLASGOW Vita Student at Beith Street, Glasgow | Select Property Group

Glasgow University, Kelvingrove, Main Building

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THE DRIVERS OF GROWING STUDENT DEMAND WORLD-CLASS UNIVERSITIES

University of Strathclyde

Glasgow Caledonian University

• Strathclyde was named Entrepreneurial University • A history of being named as the university that of the Year in the 2013 Times Higher Education offers Scotland’s best international student awards - the third consecutive win in the awards, experience following University of the Year in 2012 and • Scotland’s fifth largest university and has a total Research Project of the Year in 2011 of 17,000 students who come from more than • Third largest university in Scotland with 22,000 100 countries students, with 17% from overseas University of the West of Scotland • 15,000 students, of which there are over 1,100 international students • The Research Assessment Exercise awarded its highest ‘World Leading’ rating to six of the university’s research areas and gave a further seven the ‘International Excellent’ rating

Glasgow School of Art • Founded in 1845, it is internationally recognised as one of Europe’s leading art-specific universities • International students from over 69 countries Royal Conservatoire • Charles Dickens delivered the Conservatoire’s inaugural address in 1847 • One of Europe’s most accomplished performing arts institutions

FROM A PROPERTY INVESTMENT PERSPECTIVE, THIS SHOWS THAT NOT ONLY IS THERE HUGE DOMESTIC DEMAND FOR UNIVERSITY ACCOMMODATION – FROM A MARKET THAT HAS MORE DISPOSABLE INCOME THAN ANY OTHER STUDENT BASE – BUT THERE WILL BE OPPORTUNITIES TO IMPRESS STUDENTS ENOUGH TO SECURE REPEAT BUSINESS AND ULTIMATELY, FOUR-YEAR TENANCIES. 14

Vita Student Glasgow | Select Property Group

Vita Student, Glasgow

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GLASGOW’S WEST END 16

GLASGOW’S WEST END ENCOMPASSES THE COUNTRY’S LARGEST UNIVERSITY, A LARGE EXISTING STUDENT POPULATION AND A STRONG PROPERTY MARKET.

Vita Student Glasgow | Select Property Group

Period terraced houses, Glasgow’s West End

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THE CURRENT STATE OF UNDERSUPPLY

A BUOYANT PROPERTY MARKET

11,000

HMOs

SCOTTISH COUNCILS NEED TO REAPPROPRIATE INTO THE MAIN HOUSING MARKET Glasgow’s six universities can only guarantee halls of residence housing for around 10% of their students, meaning that other sources need to make up the vast shortfall.

Currently houses of multiple occupancy (HMO) are often used to plug the gaps in undersupply.

According to Knight Frank’s Student Property 2014 report, 75% of Glasgow students are forced to live in HMOs – a level that due to the forecasted rise in demand for university places, will only increase if no other housing provision is provided.

Knight Frank identified that across the UK the sector “has demonstrated that, given the choice, students will elect to pay significantly more for PBSA accommodation than HMO stock”. In Glasgow this manifests as almost a 30% rental premium.

Most local authorities in the UK would also welcome further PBSA investment. In 2013 Savills identified how more purpose-built accommodation could help alleviate some of the wider constraints in the UK’s housing supply. Savills concluded an additional Scottish 11,000 HMOs – the highest concentration of which was found in Glasgow – This critical undersupply is providing Glasgow’s could be reappropriated into the main housing landlords with the very highest HMO returns in market. If all of these houses were removed from the UK. Research carried out at the start of the last the student accommodation sector, Scotland academic year revealed Glasgow student HMOs would need an additional 30,000 new student yielded annual pre-tax returns of almost 5%. The beds – representing a doubling of the size of the report found a four-bedroom house was easily current university and privately owned student capable of generating monthly rent of £1083, which accommodation market in the country. for the student market represented a higher yield than Manchester, London, Oxford and Cambridge.

Currently, rents across the city’s PBSA provision range from £123 a week to £263, while the average Despite the high rents and nation-leading rent of a studio is £197. Locations vary as much as yields, the reliance on HMOs is far from ideal. the price, and currently only a few PBSA buildings Students are now savvy consumers and recognise are anywhere near the prized West End location. the added value that professionally managed and high-specification purpose-built student There is also the issue of quality. Students favour accommodation (PBSA) provides.

PBSA because it is modern and is more suited to their lifestyle than HMOs. However, old fashioned Investors realise there is a need for a higher PBSA shares similar limitations as HMO and standard of accommodation than HMOs provide can fail to provide easy access to high-speed and the growth in the PBSA market over the past internet, modern living facilities and have a lack of decade has given students who cannot access communal facilities. university halls of residence more choice. Wellplanned PBSA options have the capability to offer higher quality accommodation, with high-speed internet, professional management and rents that are inclusive of all bills and living expenses offering a premium living experience.

60,000

STUDENTS DO NOT HAVE ACCESS TO PURPOSE-BUILT ACCOMMODATION 18

Vita Student Glasgow | Select Property Group

The West End compromises picturesque, highquality Victorian architecture, interspersed with stylish bars, cafes and restaurants. It is favoured by students not only for its close proximity to the University of Glasgow, but also the lifestyle and experience it offers.

This thriving region is the leading performer in Glasgow’s wider property market. At the beginning of the last academic year, average Glasgow property prices were £128,000, while in the West End homes averaged £170,000. In the specific G12 postcode area of the West End, average house prices were over 89% higher than the city average. It is hard for investors to get property in this affluent area, as when houses do become available they are usually snapped up by developers for conversion into apartments.

It’s a micro market that has doubled in size in recent years, with local estate agents predicting “ample space for the market to grow further”. These forecasts have boiled down to forecasts of 21% in the next five years.

According to many reports, including CBRE’s sector review, UK student property investment surpassed £2.3 billion in 2014, generating yields that are far higher than standard residential investments.

However, the sector is set to expand further in 2015.

The opportunity to invest in Scotland will be a key component of this.

Both the National Association of Estate Agents and Colliers International state Scotland was starved of investment prior to last year’s independence referendum and this year will see a regional boom.

“We expect we will be very busy in the coming months as vendors and buyers, many of whom have put off making a decision to buy or sell a property in Scotland due to the referendum, return to the market.

This will lead to an increase in the number of transactions at all levels of the market.”

Knight Frank Scotland

The West End is a prime market that is also set to benefit from the wider surge underway in the Scottish property market and the continued investment emphasis on student property.

WITH GLASGOW HAVING A LONGSTANDING APPEAL AS A UNIVERSITY CITY, ITS PBSA STOCK IS SOME OF THE MOST MATURE IN THE COUNTRY. THIS NOT ONLY SIGNIFIES LONGEVITY, BUT ALSO TELLS INVESTORS THERE IS AN OPPORTUNITY TO PROVIDE AN IMPROVED, MORE STUDENTFOCUSED ACCOMMODATION OFFERING – ESPECIALLY CONSIDERING THE REDEVELOPMENT PLANS WITHIN THE AREA.

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CHOOSING A LOCATION 20

Vita Student Glasgow | Select Property Group

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It will expand the campus size by 25% and bring the university’s West End presence to 74 acres, the equivalent of 30 city centre blocks. The larger footprint brings the university grounds in line with Byres Road, Dumbarton Road, Kelvingrove Park and cultural hubs, such as the Kelvin Hall.

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“As ever, the student experience is at the heart of all that we do, and the campus redevelopment will allow us to focus on what our students want and need, as well as providing an environment that is open and accessible to the wider community.”

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Vita Student Glasgow | Select Property Group

“Expanding our international student community will mean focusing on international students’ integration and offering them an exceptional experience.”

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LS T This expansion is one of the cornerstones of the university’s long-term plans, with the institution believing the project will be as historically significant as its move to the West End from its original city centre High Street location.

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The university has also stressed a need to use the new facilities to enrich university and city life with their different experiences and perspectives – especially for international students, stating:

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The area’s largest university – the University of Glasgow – is currently undergoing a £135 million expansion, updating facilities to meet further demand and cement its world-leading, researchintensive reputation.

Professor Anton Muscatelli, Principal and Vice-Chancellor of the University of Glasgow

According to Glasgow 2020: A Global Vision, the university will become a truly international university, not only attracting huge numbers of multi-cultural students and staff, but developing international alliances and partnerships. The University of Glasgow already attracts 13% of all Scotland’s international students – a cohort that adds £70 million to the Scottish economy annually.

The bid follows a declaration, signed by the Indian and British Prime Ministers, to make the institution a ‘partner of choice’ for new Indian institutions.

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The university views the Western Infirmary site as a unique opportunity to re-shape the campus and provide modern, fit for purpose facilities that are in keeping with its status as a world-leading researchintensive university and its objectives for 2020.

One of the first successes of the globally integrated approach is the university’s successful bid to become a strategic partner of the Indian Institute of Science, Education and Research, Pune.

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As well as enhancing the area’s accessibility, creating a safe and pleasant pedestrian environment with clear thoroughfares from local transport hubs, the global entrance will manipulate the area’s foot flow creating a natural nexus on Dumbarton Road.

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UNIVERSITY OF GLASGOW EXPANSION PLAN

One of the most significant and far reaching additions will be the inclusion of a new global entrance off Dumbarton Road.

THE IMPACT OF THE UNIVERSITY OF GLASGOW’S EXPANSION PLAN CANNOT BE IGNORED IN A THOROUGH ASSESSMENT OF THE CITY’S STUDENT ACCOMMODATION. IT WILL HELP SECURE INCREASING STUDENT DEMAND FOR MANY YEARS TO COME AND AS THE UNIVERSITY CAMPUS SHIFTS SOUTH, WILL ALTER FOOTFALL, TRAVEL ROUTES AND CREATE NEW LOCATIONS FOR STUDENT PROPERTY. 23

UNIVERSITY OF GLASGOW

ÂŁ1.2 BILLION REDEVELOPMENT OF GLASGOW HARBOUR

VITA STUDENT

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RESIDENTIAL

LANDSCAPING

COMMERCIAL

RETAIL + LEISURE

INFRASTRUCTURE

Residential district with 2,500 high quality, riverfront view apartments.

New extensive redevelopment of 15acre public park, creating a tranquil waterside leisure space.

Commercial district with two million sq ft of high quality office space.

Restaurants, bars, shops and leisure facilities.

Road improvements offer quick access to the motorway network and Glasgow Airport.

Vita Student Glasgow | Select Property Group

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ONE OF SCOTLAND’S LARGEST EVER INVESTMENT PROJECTS, GLASGOW HARBOUR REPRESENTS AN UNMISSABLE OPPORTUNITY FOR PRIVATE INVESTORS. NOT ONLY WILL IT REGENERATE THE HISTORIC DOCKLAND AND UNDERSCORE THE ATTRACTION OF THE WEST END, IT WILL VASTLY IMPROVE THE LOCAL ECONOMY, CREATING FURTHER JOBS AND SUPPORTING THE HIGH-PERFORMING PROPERTY MARKET IN THE WEST END.

GLASGOW HARBOUR IN NUMBERS

1.4m 47 13

£74 MILLION RIVERSIDE MUSEUM ATTRACTS 1.4 MILLION ANNUAL VISITORS 47 RETAIL UNITS, TOTALLING 18,424 SQ M 13 RESTAURANTS, TOTALLING 5,535 SQ M

The 130-acre site extends nearly two miles along Glasgow’s waterway, with the bulk of the regeneration work centred at the confluence of the rivers Clyde and Kelvin. Once the locale of the city’s famed ship-building industry the £1.2 billion brownfield regeneration is now part way through a two-phase mixed-use development that will eventually result in a retail-led district that also features residential units, offices, hotels and leisure facilities.

A new bridge from Partick Station offers a direct route into the heart of Glasgow Harbour, while new roads, walkways and a £25 million road upgrade link the city within a city to the huge residential and student markets of the West End.

With an emphasis on driving the area’s long-term economic growth, the major new precinct will be linked to Glasgow’s existing tram, pedestrian and cycle routes.

Already the regeneration has increased both pedestrian and road traffic flow to the south of Glasgow’s West End and once complete the complex, adjacent to the Riverside Museum, will be a thriving economic centre, attracting further investment and creating up to 20,000 jobs in the area.

The primary pedestrian access point to Glasgow Harbour Redevelopment is via Patrick Interchange, the fifth busiest station in Scotland, transporting four million passengers annually.

Squiggly Bridge, Glasgow Harbour

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Vita Student Glasgow | Select Property Group

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A CLEAR CONCLUSION

Glasgow has 80,000 students, a clear undersupply of PBSA, and two major redevelopments capable of generating long-term economic growth in the already affluent West End region. It has been identified as one of the UK’s top-tier investment locations and already generates the highest student rents in the country.

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Vita Student Glasgow | Select Property Group

The city also has a standout location for student property investment. The region centred on the crossroads at Beith Street, Dumbarton Road and Byres Road is already close to the University of Glasgow and situated in the popular West End. The two redevelopment projects will have the effect of pulling the centre of student and wider pedestrian traffic further south.

Arc bridge sitting over the River Clyde

The Vita Student residence is located at this site, positioned between the wider West End to the north, the universities new entrance to the east and the harbour redevelopment complex to the south – all of which are less than five minutes’ walk away.

There has never been a better time to invest in Scottish student accommodation and there may never be such a clear-cut location option.

The plot between the new entrance to the country’s largest university and the city’s most ambitious redevelopment project, amid some of the highest appreciating assets in the market will be the most sought after by all property developers.

The fact that both investment and construction has been on a politically imposed hiatus only adds to the unrivalled potential of this region.

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