Information on the Target

Dandara Living, the purpose-built student accommodation (PBSA) and Build to Rent division of Dandara Group, has established a strategic joint venture with Gamuda Land UK to develop a landmark PBSA project named City Wharf in Glasgow, Scotland. This partnership is focused on addressing the pressing need for high-quality student accommodation in one of the UK’s most dynamic and underserved student markets.

The City Wharf development is set to provide 492 new student beds, incorporating both modern studio apartments and cluster rooms designed to accommodate the evolving needs of contemporary students. Dandara Living will take on the roles of both developer and contractor, with construction slated to commence in 2024 and completion anticipated for the 2026/27 academic year.

Industry Overview in the Target’s Specific Country

Glasgow is home to over 88,000 full-time students but faces a severe shortfall in student accommodation, with an reported deficit of approximately 22,000 beds. The demand for adequate housing in this vibrant city has surged, highlighting the urgent need for investment in the PBSA sector. The local education landscape, with three major universities—University of Glasgow, University of Strathclyde, and Glasgow Caledonian University—further amplifies this necessity, creating a lucrative market for developers.

The UK student accommodation market is characterized by a growing preference for high-quality, well-located housing options. Investors are increasingly recognizing the potential of this sector, particularly in cities like Glasgow where student populations are swelling but supply is dwindling. Recent trends indicate a shift towards more sustainable living arrangements, influenced by environmental policies and student expectations for green living.

Furthermore, the UK government has initiated several policies aimed at expanding and improving student accommodation, which is expected to encourage further investment and development in this area. With sustainability becoming a key focus, developments that meet these criteria are more likely to attract both investors and tenants alike.

The Rationale Behind the Deal

The formation of the joint venture between Dandara Living and Gamuda Land UK underscores their commitment to alleviating the housing crisis faced by students in Glasgow. By developing City Wharf, the partners aim to not only enhance the availability of accommodation but also set new standards for the quality of student living in the area.

This project is designed with sustainability at its core, which aligns with Glasgow’s objectives for climate responsibility. Incorporating low- and zero-carbon technologies is intended to achieve a BREEAM Very Good rating, which will appeal to environmentally conscious students and investors.

Information About the Investor

Gamuda Land UK is an offshoot of Gamuda Berhad, a prominent property development group based in Malaysia. The company has made significant investments in the UK real estate market, committing £1.4 billion since 2022 to various sectors including prime commercial and residential properties, as well as purpose-built student accommodation.

This collaboration signifies Gamuda Land UK’s first foray into student housing outside of London and represents an important phase in their expansion strategy across the UK. The company aims to establish a comprehensive PBSA portfolio, targeting to build 3,000 student beds across the UK by 2027, showcasing their dedication to addressing accommodation shortages in key regions.

View of Dealert

From an expert perspective, the partnership between Dandara Living and Gamuda Land UK on the City Wharf development appears to be a strategically sound investment. Given the acute deficit of student accommodation in Glasgow, the project is well-positioned to meet the growing demand, making it viable for long-term success.

Moreover, the focus on sustainability aligns with current market trends and regulations, positioning City Wharf as an attractive option for students who prioritize eco-friendly living. This strategic alignment with local needs and broader environmental goals is a significant factor in its potential return on investment.

The timing of this investment is also advantageous; as the construction phase commences in 2024, the anticipated completion in 2026/27 coincides with the projected increase in student enrolments in the region. This foresight is likely to enhance occupancy rates, thereby ensuring robust cash flow for stakeholders involved.

Overall, City Wharf exemplifies a forward-thinking approach to real estate investment in the educational sector, combining a critical response to supply shortages with a commitment to sustainability, which could lead to solid returns and value addition in the Glasgow property market.

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