Investec Real Estate has provided modular development firm Stelling Properties Group an £11.85m loan to finance the construction of a purpose-built student accommodation (PBSA) scheme in Southampton.
The 122-studio scheme is due to complete in time for the 2024-25 academic year, and is being constructed on a former Bank of England site where the Grade II-listed high street frontage will be retained as part of the development.
Stelling will manufacture the property offsite at its factory in Hampshire, reducing the overall environmental impact of the project.
According to data from StudentCrowd, Southampton, alongside Durham and Glasgow, had the lowest PBSA availability for the 2023-24 year.
This is Investec’s second transaction with Stelling, having previously provided an £11m senior facility to fund the development of Riverside House, a 99-studio student scheme in Guildford.
Earlier this month, Investec published its third Future Living report, revealing global institutional investors attitudes towards the UK Living sector.
PBSA saw the biggest shift in sentiment in the past two years, rising from tenth to first in terms of investor appeal, with 59% of respondents optimistic about the prospects for the sector.
Last year, Investec passed the £1bn lending milestone in student accommodation, having funded 22,000 beds across 55 schemes in 23 cities since 2011.
Ian Burdett at Investec Real Estate, said: “Our latest Future Living report highlighted the strong prospects for the UK student accommodation sector and this transaction builds on our market leading track record in this space, in what is a critically undersupplied market.
“Working with repeat borrowers has been key to our loan book resilience, and Stelling’s innovative utilisation of modular construction methods ensures they deliver high quality schemes in an efficient and sustainable manner.”
Jose Ignacio Alvarez, executive chairman at Stelling Properties, added: “We are thrilled to be partnering with Investec once again, following the success of Riverside House in Guilford.
“This project will not only provide much needed quality purpose-built student accommodation in the area but utilising modular construction it will also bring an historic building back to its original glory and help to revive a busy city centre high street.”
