Student accommodation
Although the student accommodation market has become saturated in some cities, we still believe the opportunity for this asset class remains strong and will continue to offer good returns for investors.

We expect the overall demand for purpose-built student accommodation to increase, particularly in the short to medium term, driven by a significant population bulge in the current 16-20 age bracket of teenagers and young adults who will leave school in the next two to three years. A growing overseas student market, which makes up nearly a quarter of the current student population according to Cushman & Wakefield, remains attracted by the strength and reputation of the UK’s higher education system and further supports the anticipated increase in demand.

On the supply side, many cities have a well-developed student accommodation offering; in secondary regional cities, the shortage of purpose-built housing for students is more acute. In order to capitalise on these opportunities, it is important to have an understanding of where students want to live, how they use their accommodation, and to provide this at an affordable price. At Maven our focus is on identifying and developing sites to deliver what students want or need, such as an onsite gym or bike storage and tailoring the accommodation to fit the specific requirements of the area.

From an investor perspective, purpose-built student accommodation developments, once completed and occupied, can generate high single-digit or double-digit yields, which for assets typically located in or around a city centre, is particularly compelling versus other sectors.

Hotels
The UK hotel sector performed well in 2018, with particularly strong revenue levels recorded in regional towns and cities. We are optimistic about the outlook as the key drivers – tourism and business travel, and regeneration of deprived areas – remains strong. By utilising an acquisition and renovation strategy, which purchases non-income generating assets, such as empty office space at the bottom of the market, turning them into hotels, investors can earn steady revenue streams and benefit from strong capital gains on the sale of the asset. Maven’s Hotel Indigo in Durham and Cardiff, and two Ibis hotels in Glasgow, are good examples of this. Such investment helps to bring commercial property back into use, creates employment and contributes to local economic regeneration and leisure facilities, which is important to help drive visitors to UK towns and cities.

Tourism in the UK has been boosted as a result of the competitive value of sterling, attracting not only overseas tourists but encouraging domestic holiday makers. The hotel sector has benefitted considerably as a result and we believe it remains robust in the face of general economic uncertainty, with growth set to continue this year and next, albeit at a slower pace. While some regional markets risk an oversupply of new hotel accommodation, there are other towns and cities where further development is required. We continue to see opportunities throughout the UK and expect that differences of opinion in the market will allow shrewd investors to capitalise on this and, with funding more difficult to secure, we can afford to be very selective in our investment decisions.

From an investor perspective, hotel developments, once completed and open for business, can also generate very attractive cash flows. Again these are typically properties which are well located in city centres and the income stream can outperform other commercial property assets. Consequently, we typically expect to hold completed hotels until trading matures and benefit from the income generated during our investment period.

Office Space
The office market has been transformed over the past 10 to 15 years. Large tenants – blue chip companies and public sector organisations – have wound down their leases with many of the traditional office buildings of the 1970s and 1980s which no longer meet market demand.

These buildings are being acquired and refurbished to meet the specific and very different needs of businesses today. Again, it is the secondary cities which are providing the strongest returns. Knight Frank research suggests that UK regional cities are delivering yields of up to 5 per cent, while yields in London are also strong at just above 4 per cent, compared with other European cities, which offer yields of between 3 and 4 per cent.

Companies are looking for shorter leases to stay in line with the changing work environment driven by flexible and co-working office space. Developments also need to satisfy the demands of the modern professional, who favours access to amenities such as a lounge or gym, bicycle parking and shower and changing facilities, as well as being close to transport infrastructure.

Many regions with strong transport links have seen significant price rises in office space recently, such as the Thames Valley, Slough, Manchester, Birmingham, Bristol and Cardiff, to name but a few.

London’s office market appears to be as buoyant as ever. Brexit has had an impact, but this is likely to be short-term as the capital’s long-term commercial office market fundamentals remain strong. Regardless of where the UK remains in the EU, it will always be a strategic location for international business due to the time zones between Asia and the US, and foreign businesses are keen to invest in a market where the ownership of property is seen as probably the most secure in the world.