The new Fallowfield Campus Redevelopment plans to provide 3,300 University of Manchester (UoM) student homes by 2027, expecting to cost around £400mn.
The first phase of the development, demolishing some 2,350 existing student rooms in Fallowfield, has recently kickstarted the expensive project, which the University of Manchester promises will deliver ‘high-quality, sustainable’ student housing that ‘keeps student wellbeing at its heart’. The architect responsible for the design of the new scheme, Sheppard Robson, has created five distinct student neighbourhoods, each with a particular theme relating to ‘Manchester’s cultural heritage’.
New housing will be practically unaffordable
Not only will this £400mn development produce student housing which is practically unaffordable under the current Maintenance Loan Schemes – the rooms are estimated to cost £235 a week or £9,635 per 41-week academic year (as opposed to £178-£255 weekly at the moment in Fallowfield), which will be barely covered by the highest tier of the scheme in the UK – but the money to finance the project will come from a global private equity organisation known as Equitix, part of the Viridis Living Consortium.
The Manchester Student Union (MSU) has argued against the rental cost of the rooms, calling it ‘yet another rent hike…when rent is the biggest issue facing our students already’ .
A self-described ‘international investor, developer and fund manager in infrastructure’, Equitix’s website contains a series of verbose but opaque descriptions of what they do. Indeed, it is their ‘strategic approach in identifying niche opportunities’, their skill in ‘executing complex transactions’ and expertise in ‘continuous asset management’ that gives Equitix’s high-finance, low-profile investors the confidence to choose their services over presumably many other competitors in the asset-management, private-equity field.
In real terms, Equitix acts as a middleman between wealthy institutions and the public infrastructure projects into which they invest in the hope that they will see a stable, long-term return to keep them in the black.
Pension funds and Saudi investment money
Typically, Equitix’s money comes from institutional investment like pension funds from the UK, Australia and elsewhere. More recently, however, Equitix acquired a deal to co-manage Rakiza, an asset management organisation based in Oman, that has been awarded $300mn from Saudi sovereign investment. The exact fiscal trajectory of this Saudi money into Equitix’s own portfolio of public infrastructure schemes, like the Fallowfield Campus Redevelopment project, is unclear. What is clear is that money regularly travels far: Equitix’s pension fund partners, Aware Super, invest Australian pensioners’ cash into telecoms infrastructure in Europe, United States and Asia.
Pension funds and sovereign wealth are big clients for infrastructure investors. Equitix and similar equity investors gather together clients’ cash in a fund used to finance UK schools, hospitals and, in this case, student accommodation. Student housing investments are, additionally, considered particularly low risk for Equitix and their investors. Reliable, stable sources of income, not normally affected by inflationary costs and backed by a large, wealthy public institution like a university, investment in student halls can offer a regular return on pension funds and other forms of investment that fits the right time-span.
Student friendly design, but out of reach?
This, then, might explain why it has been so difficult for the Fallowfield Campus plans to produce affordable housing targeted at students’ needs. While the project promises a sustainable, student-friendly design that claims to highlight Mancunian cultural heritage above all else, the financial backbone of the project is likely designed to offer global investors long-term and profitable returns.
Despite investing in public infrastructure, Equitix’s clients, and the clients of similar asset management firms, do not have to make themselves known. It is the very structure of this kind of financial investment, where an asset management organisation like Equitix produces a portfolio of international money, that makes investors hard to identify. This means that much of the UK’s public infrastructure – such as student housing projects like the new Fallowfield Campus – is backed by private clients who are almost always difficult to pin down. Public-interest projects therefore have reduced transparency despite lower levels of financial risk for investors.
Rents will have to provide dividend for investors
While the UoM claims that this complex is designed to combat rising demand in student halls, if affordability is a problem because of high prices this will always raise the question: are the university’s plans more suited to the students – or to the investors?
Manchester University was asked for comment but at the time day of publication has not responded (five days later)
Friends of Bylines Network
There has never been a greater need for grassroots journalism that investigates the stories that really matter, holds power to account and champions the voices of everyday citizens. We are proudly powered by volunteers but what we do isn’t free.
STAND WITH US for independent, citizen-led journalism that makes democracy stronger, and you will even get some exclusive benefits.
