Bahrain-based Seera Investment Bank has negotiated a Sharia-compliant structured financing facility to develop a new purpose built student housing project and commercial property in central London.

When completed next year, the property will offer 339 student rooms and 37,000 sq ft of commercial space.

Construction of the property, which is located near Aldgate East Station in Central London, and in close proximity to several higher educational institutions, is well underway with the first phase having just been completed.

"We are really excited about this opportunity," said Seera chairman Khalid Al Nasser.

"The strong position of the UK and London as a destination for higher education combined with the persistent shortage of purpose built student accommodation in the UK provide a very solid platform for the student housing sector from an investor point of view.

"The demand-supply gap in the sector supports a positive outlook for rental income and capital growth," he said.

"The student housing sector is also of interest to Seera and its investors given the current economic climate, the recession proof nature of demand for UK student accommodation and the yielding nature of investments in the sector.

"This particular deal is underpinned by the property's prime location, attractive investor returns, relatively short investment tenure and the deal's favourable risk profile," he added.

"Attractive risk adjusted returns for investors are a major attraction of this investment, including an annual yield around 8.5 per cent, an expected internal rate of return of between 13 per cent to 14 per cent on exit, and a relatively short investment period of just two-and-a-half years," said Seera chief executive Abdulla Janahi.

"During the transaction structuring phase, we gave particular importance to mitigating risks and have put in place innovative mechanisms to maximise protection from downside risks.

"The involvement and backing of Mace, a leading UK-based developer, project manager and construction partner is also of particular importance, and provides confidence that the project will be executed to high specifications, on time and on budget."

"Seera's strategy is to invest in deals with strong fundamentals and in industries which are not highly cyclical," he said.

"We believe that given the low correlation of the student housing sector with economic cycles, the strong market fundamentals of the sector and the property's attractive features, this deals fits very well with this direction," he added. – TradeArabia News Service