Kuwait’s Dimah Capital Investment has acquired incoming generating real estate in Britain for $70.84m, the vice chairman and managing director of the investment firm said on Monday.
Sameer Al Gharaballi said that Dimah had bought Parham Road, a student’s village in Canterbury that comprises of 16 buildings of student housing with an accommodation capacity of 800 beds.
“The majority of these properties are residential with a 100% occupancy rate since they were built eight years ago,” he said. “This transaction will provide investors with an average net cash return of 8.2% per annum, to be paid monthly, and the net internal return rate will reach 13.3% during the three year holding period.”
Both Dimah Capital Investment and 90 North Real Estate Company, which works in the real estate sector compatible with Islamic law, will be investment advisors for the deal, Gharaballi said.
“This acquisition is part of a well advised plan to expand and diversify the real estate investment portfolio of Dimah Capital through the purchase of estate properties generating fixed and stable returns and having a low risk rate, in line with the current developments in the international markets, and to meet the aspirations of shareholders and investors,” he explained.
Student accommodation is one of the UK’s fastest growing sectors in terms of real estate value in terms of rental value, and the average annual growth of rents in this sector reached 5% over the last five years.
In particular, the Canterbury region, which is located in the province of Kent, is an area densely populated by students. The presence of five universities in the area has lead to an increase in demand for student accommodation, compared to what is currently available.
The region is located in a ‘green belt area’, which severely limits the construction process and as such reduces the chances of constructing new student housing facilities.