The London and Moscow-based real estate consultancy AZ Real Estate has acquired City Edge, a 136-apartment student accommodation block in Birmingham on behalf of a private Russian buyer.
Located just a short bus ride from the Birmingham City University South Campus (the subject of a £41 million state-of-the-art expansion), City Edge was purchased on a leasehold basis for £10.6 million.
The fully tenanted accommodation was converted from office space in 2016 and includes a ground floor retail unit that is currently occupied by Guitar Guitar limited, with combined income for the building delivering an attractive net initial yield of 7.5%.
In addition to a growing domestic and international student population – which already extends to over 63,105 students across five higher education institutions – Birmingham will receive government infrastructure investment by hosting the landmark High Speed 2 (HS2) rail project.
The 30-year economic and housing Curzon Investment Plan (designed around the arrival of HS2) is expected to create 4,000 new homes and 36,000 jobs and generate a £1.4 billion uplift to the city.
City Edge is currently managed by Homes for Students and was purchased with a lease of 111 years. Along with contemporary studio apartments spread across the first to fifth floors, there are staff offices, bicycle storage and laundry facilities.
Alisa Zotimova, founder and chief executive officer of AZ Real Estate, said: “This represents a significant acquisition with a strong long-term yield thanks to a highly buoyant student market, with limited supply of purpose-built accommodation.”
Zotimova said the acquisition highlights the shift in investment trends, where clients are ‘forgoing traditional trophy assets in favour of those with stronger long-term returns and projectable cash flows’.
She added: “Birmingham is the UK’s second city, with an attractive ‘knowledge economy’ that will continue to prosper, giving us confidence in this investment for the future.”
AZ Real Estate advised the client on the entire transaction process through to the exchange and completion. Knight Frank acted for the seller and McHale & Co acted as the solicitor.