The project is scheduled to be completed in 2026. (Source: Far East Orchard)
Far East Orchard is expanding its portfolio of UK purpose-built student accommodation (PBSA) portfolio into Scotland with a £38.9 million ($50 million) development joint venture in Glasgow.
Far East Orchard, the SGX-listed investment unit of regional developer Far East Organization, is teaming up with Singapore construction firm Woh Hup Holdings to develop a 273-bed facility in the Merchant City area, southeast corner of Glasgow city centre.
The project, to be completed in 2026, marks Far East Orchard’s 15th development in the UK as it looks to plug the student accommodation gap in a city which is home to one of the world’s top 100 universities and where the ratio of students to available beds reached 2.4:1 last year.
“This development will help ease the shortage of PBSA in Glasgow and strengthen our presence in a key study destination,” Alan Tang, the firm’s group chief executive officer, said in a statement on Wednesday. “In alignment with the group’s FEOR 25 strategy to grow its PBSA portfolio and build a lodging platform to achieve sustainable and recurring income, we will continue expanding our student accommodation portfolio into key UK cities which have significant demand and supply imbalances.”
Chasing High Rents
Far East Orchard and Woh Hup are acquiring the site for the project from local real estate firm Nova Osbourne for £3 million, pending planning approvals, according to the announcement. Far East Orchard owns an 85 percent interest in the joint venture while Woh Hup holds the remaining 15 percent stake, and the seller, Nova serves as the development manager for the project.
Alan Tang, CEO of Far East Orchard
Educational institutions including University of Strathclyde and Glasgow Caledonian University are about one mile (1.6 kilometres) north of the site, while it takes around a 15-minute drive to reach the University of Glasgow.
The project, which is expected to cost the equivalent of £142,500 per bed, is seen injecting much-needed university housing into Glasgow after the city added 8,165 international students over the past decade while delays due to the pandemic meant that no new student housing projects opened during the 2023-2024 academic year.
With more students moving in and no projects opening up, PBSA rents in Glasgow jumped 19.4 percent for the ongoing academic year compared to the preceding annual term, the fastest pace of growth among key PBSA markets in the UK, according to the same report.
Far East Orchard and Woh Hup in 2022 had teamed up with Singapore family office Way Assets to invest in a £26.6 million PBSA project in Bristol, England. That 690-bed project close to a satellite campus of the University of Bristol, is expected to be completed in 2026.
PBSA As Growth Driver
Once completed, Far East Orchard’s two latest projects will bring its PBSA portfolio to 4,700 beds across 15 locations in the UK, including three existing properties in Bristol: the 301-bed King Square Studios it bought from LaSalle Investment Management in 2020, as well as the 166-bed St Lawrence House and Harbour Court, a 133-bed facility it acquired as part of a £55 million deal in 2019.
Beyond student housing, the firm controlled by the Ng family which also controls HKEX-listed Sino Land, owns 10 hotels and manages nearly 100 properties across Asia Pacific and Europe.
Far East Orchard saw its profit attributable to equity holders triple to S$66 million ($49.5 million) in 2023 from S$21.9 million the year before, in large part due to fair value gains on its UK student housing assets.
Revenue generated by its UK PBSA business rose 14 percent to S$46.4 million last year on the back of higher rents and 99 percent occupancy in its portfolio.
“Our twin engines of the hospitality and PBSA businesses are now running at full steam, and we are optimistic as international travel recovers and the student demand for UK higher education remains robust,” Tang said in the firm’s financial statement last month.