Brandeaux published the update following its decision earlier this month to suspend its entire fund range, including its £1bn Student Accommodation Fund.
The update sought to explain some elements of the initial announcement made by Brandeaux on 1 July. This included an explanation of the word “overhang” which essentially means there is an excess of properties in the student accommodation sector.
The update explained part of this overhang had been caused by the financial failure earlier this year of The Opal Group – one the UK’s largest private student accommodation providers – with most of its property-owning companies being placed into administration in March and April.
Brandeaux said: “This has resulted in approximately 19,000 beds historically valued at over £1bn recently being put onto the market for sale. Our estimation is that this represents circa 10% of all private (non-university owned) UK purpose built student accommodation.
“The Opal properties are in addition to over £1bn of other UK privately owned, purpose built student accommodation properties currently or shortly anticipated to be in the market for sale, excluding any Brandeaux properties.
“This in our view represents an “excess” level of student accommodation property available property for sale compared with historic availability.”
The excess of property on the market is one of the major reasons Brandeaux was forced to suspend its funds, according to the update.
]Despite the failure of The Opal Group earlier this year and the continued excess of property within the student accommodation sector, Brandeaux said the fundamentals behind the asset class “remain strong”, adding that it had attracted “substantial institutional investment”.
Brandeaux also said it does not see the large amount of student accommodation on the market as causing an occupancy problem, arguing that demand from students and universities also remains strong.
