Dojo House, Nottingham (PBSA)
Dojo House, Nottingham (PBSA)
41 Studio PBSA (Purpose Built Student Accommodation) development
is being delivered as a turn key solution by a team of experienced property professionals,
with ongoing full management in place.
PROJECT DESCRIPTION
- Ilkeston Road, Nottingham, NG7 3FX
- Cost of acquisition: £3,650,000
- Vendor | Developer: ALB Group
- Lettings & Property Mgt.: Uni2 Rent
- 41 Studio Flats
- Completed in Aug 2021
- Fully tenanted in Sep 2021
- ROI (projected): 29%
- Selling Price: £5,000,000
EXECUTIVE SUMMARY
Dojo House represents an exceptional opportunity to acquire high quality PBSA (Purpose Built Student Accommodation) in one of the biggest student markets in the UK. A scheme of 41 student studios reflecting a net yield of 7.6% on the £3.65m purchase is a big discount on the market rate. Once tenanted, similar PBSA schemes in Nottingham have sold on a 5.5% yield, some as low as 4.5% yield at the most prime level of location, size, spec and occupancy.
We are targeting the international student sub-market, which is the upper rental quartile of the total student market. They represent 22,000 of the 70,000 students that Nottingham hosts each year across it’s 2 major universities. With rental figures shown in this document of £165-£185 per week , it sits about in the middle of the £90-£245 per week range, so we remain conservative in our figures.
Dojo House aims to provide an ambitious and aspirational space for students. The potential for the site is there and, subject to the right marketing, could really place itself on the map as a highly desirable place for students wishing to live.
MARKET POSITIONING
70,000 students reside in Nottingham to study across 2 of the UKs top universities. Nottingham Trent was voted as University of the Year for 2018 and University of Nottingham placed in the top 100 universities in the world
22,000 international students (of the 70,000 total) call Nottingham home for their studies, and in general demand higher quality accommodation with better amenities, such as gyms, social areas and work/study spaces. They occupy the upper quartile of rental rates, and set the ceiling prices of the market, which in turn yield high values of the developments. Premium PBSA schemes in prime Nottingham sell for around 4.5%-5.0% yield and are valued as such.
PBSA room rates range within the 22,000 student sector from £90 per week for basic specification studios, right up to market leading studios at £269 per week. Ilkeston Road is very conservatively analysed at £165-£185 per week.
COMPETITORS
Nova - £156-£269 per week
Famously high specification with gym, night club, karaoke room, cinema, study rooms and top floor sun lounge.
Study Inn, Talbot Street - £156-£269 per week
Good rooms, but with a high level of amenities incl. spa, gym, cinema, pool tables, table tennis and study rooms.
The Student Lodge - £104-£149 per week
Average to low spec, affordable PBSA studios. Basic gym and cinema room.
LOCATIONS
Dojo House is conveniently located between the two university campuses in Nottingham. It is just a 7-minute walk to Nottingham University Jubilee Campus, 15 minutes to the main campus and a 20-minute walk to Nottingham Trent University City Campus.
Ilkeston Road is situated close to a number of bars and restaurants and is an incredibly popular area for students. Coupled with the fact Uni2 Rent currently manages a number of units in the area already, they have a strong feel as to what the students make of the location.
Nottingham city centre is only a 15-minute walk and multiple parks and recreation areas are even closer to Ilkeston Road.
MARKET RESEARCH
Purpose Built Student Accommodation, once occupied, sells on average for 5%-6% net yield in Nottingham. At 6% net yield, this represents £4.476m.
Overview of the general market in NG7 3FX, not specifically student accommodation, but all residential accommodation including houses of all conditions.
The average sold price per sqft in the last 12 months is £222/sqft, however the upper level at 80% of sales is £303/sqft, with a trend showing an increase in price per sqft as the sqft increases.
This is good for our development as we are developing 13,654 sqft, but for valuation as student accommodation on a 6% net yield basis. A private development, as professional rented accommodation, should be a value of £280-£300/sqft. on bricks and mortar represents £ 4.096m GDV.
SUMMARY
Dojo House represents an incredible opportunity to acquire 41 student studios, showing 7.4% net yield. Nottingham is one of the top university cities in the UK, home to 2 x Top 100 Universities in the world and is significantly under supplied with quality student accommodation, especially for international students.
Interested to learn more?