Strategic Move: Singapore’s Far East Orchard's $50M Investment in Glasgow Student Accommodation

Singapore's Far East Orchard, a prominent real estate developer, has made a significant move by investing $50 million in a new student housing project in Glasgow, United Kingdom. This strategic investment marks the company's strong focus on the UK student accommodation sector and reflects its confidence in the market's resilience and growth prospects. The investment unit, listed on the Singapore Exchange (SGX), is the regional development arm of the real estate company Far East Organization. The joint venture between Far East Orchard and Singapore-based construction company Woh Hu Holdings will see the development of a 273-bed facility in Glasgow’s Merchant City, located in the southeast corner of the city centre. Let’s have a look at the key pointers of the Glasgow project.

Size and Scope of the Project

Far East Orchard's decision to invest in the Glasgow student accommodation project reflects its forward-thinking vision and commitment to delivering value to stakeholders. The company's CEO, Mr Tan Swee Yiow, expressed confidence in the project's success, citing the robust fundamentals of the UK's student accommodation The $50 million project is poised to be a substantial development, indicating Far East Orchard's commitment to expanding its presence in the UK's real estate market. The project, which will be completed by 2026, is Far East Orchard's 15th in the UK. It will fill a student accommodation shortage in a city with one of the world's top 100 universities where the ratio of student-to-bed reached 2:4:1  in 2023.
Alan Tang,  the firm’s group chief executive officer, said, “This development will help ease the shortage of PBSA in Glasgow and strengthen our presence in a key study destination.” He further stated, “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 with significant demand and supply imbalances.” The project's scale underlines the company's confidence in the long-term demand for quality student housing.

PBSA rents in Glasgow 

Glasgow's reputation as a vibrant student city with renowned universities makes it an attractive location for student accommodation investments. Situated in Glasgow, one of the UK's leading academic hubs, the project enjoys strategic placement. Far East Orchard has agreed to purchase the site from Nova Osbourne, a local real estate firm, for £3 million. Far East Orchard will own 85% of the joint venture, with Woh Hup holding the remaining 15%, with the seller, Nova Osbourne. The cost of the project is estimated to be £142, 500 per bed. The project is expected to bring much-needed housing to Glasgow after the city welcomed 8,165 new international students in the past decade. After the pandemic, there were fewer housing projects till the academic year 2023-2025. As a result, PBSA rent in Glasgow increased by 19.4% for the current academic term compared to the previous term, the highest rate of growth of any key PBSA market in the United Kingdom.

PBSA Driving the UK Student Market

Despite the challenges posed by global economic uncertainties, the UK's PBSA student housing sector continues to demonstrate resilience and growth potential. The two new projects will bring the total number of PBSA sites in the UK to over 4,700, spread across 15 locations once completed. The company has three existing sites in Bristol, including:

• the 301-bed King Square Studios, which was acquired in 2020 
• the 166-bed St Lawrence House
• the 133-bed Harbour Court, which it purchased in 2019 for £55 million

In 2023, Far East Orchard's profit attributed to equity holders more than tripled from the previous year to $22.9 million, driven by a 14% rise in the UK PBSA revenue, higher rents, and a 99% occupancy rate in the portfolio. Real value gains on UK PBSA assets also contributed to the year-on-year increase of S$19.3 million to S$19.4 million. The company's PBSA revenue was $66.5 million in 2023, up from $14.9 million in 2021, driven by fair value gains.

Strategic Expansion in the UK Student Market

This project is a sign of Far East Orchard’s strategic growth beyond Singapore’s home market. By entering the UK’s student housing market, Far East Orchard is diversifying its portfolio and accessing new sources of revenue. Diversification is essential to mitigate risks and ensure sustainable growth in today’s highly competitive real estate market. Even in the face of global economic uncertainty, the UK’s student housing market continues to be resilient and full of growth potential. Far East Orchard’s investment is in line with the company’s growth strategy, taking advantage of the opportunities presented by changing market dynamics.

To sum up, Far East Orchard's partnership in a $50 million Glasgow student housing development underscores its strategic expansion into the UK market, particularly in Scotland. This move reflects the company's confidence in the resilience and growth potential of the UK's student housing sector. With this venture, Far East Orchard aims to diversify its portfolio and capitalise on promising opportunities abroad, reinforcing its position as a forward-thinking player in the global real estate arena.
The dynamic urban landscape of the UK reflects a blend of residential growth and evolving office sector dynamics, setting the stage for continued transformation for UK student housing. You can also read about investors' interest in the UK PBSA market. If you are a student accommodation provider, you can list your property with us on our website. Don’t forget to follow amber newsroom for more such updates.