Unite has bought a site in the city centre close to the Newcastle’s two universities on which it is planning to build a 200,000 square foot scheme with a capacity of 600 rooms.
The student accommodation development project is expected to deliver a 9.5-10% yield on cost, in line with UNITE’s target returns. The completion date of the development located in the prime city centre site is scheduled for 2016.
The new student halls will include communal space designed to improve students’ living and learning experience, UNITE’s latest specification en-suite cluster rooms, WiFi internet throughout the building and environmental features, such as LED lighting.
The development will contribute towards making the traditional student flats available for families. According to the results of recent research, hundreds of families have been forced to move out of Newcastle in the last few years due to a shortage of suitable accommodation.
It will be the first project to be funded from the proceeds of the Group’s June 2013 share placing and accounts for approximately 25% of the capital raised. UNITE is also trying to embark on three additional projects in similarly strong regional locations, which is part of its regional expansion plans.
Richard Simpson, managing director of property for Unite, commented on the project: "This acquisition marks good progress with Unite's selective regional development programme and is a prime example of how we are investing the proceeds from our 2013 share placing; it is in an excellent central location, well positioned for both Newcastle's universities and in a market we expect to experience continued growth.
"The fundamentals of the student accommodation market remain strong and will potentially be bolstered further by the government's plans to remove the student number cap in 2015, which could itself lead to an increase in enrolments of up to 12%.
“Unite is well positioned for continued growth both through its existing, strong portfolio and new regional developments.”
The Unite Group plc, the UK’s main developer and manager of student accommodation, already has four properties in Newcastle that house more than 1,000 beds.
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