Property Hunter Magazine Issue 63- February 2015 | Page 14
HOT TOPIC | Investing in Student Accommodation
yields on offer, which look set to continue in the
foreseeable future.
“
GRRs, also known as leasebacks, buy-to-let, cash
back or own-for-free are resultant of developers’
creativity in wooing investors with a GRR on yetto-be-built properties. According to the plan,
developers will agree to pay buyers rentals
ranging from 8% to 12% gross or net returns
of the purchase price or a proportion of the
purchase price for a stipulated period.
Paul Khong, executive director of CB Richard Ellis
(Malaysia) Sdn. Bhd.,however cautions investors
to clearly understand the incentive structure of
GRR schemes such as the actual legal entity that
is extending the guarantee and the credibility
rating of the guarantor. He advises a thorough
analysis of the developer or the party giving the
GRR, to ensure it is reputable and demonstrates
the ability to withstand a continuous payment of
guaranteed rentals over agreed periods.
One of the greatest concerns about student
accommodation is the limited scope for capital
growth and the difficulty encountered when trying
to sell these apartments. In an article published
in www.lifestyle.com.au, writer Veronica Morgan
commented that both these problems stem from
the one main cause: they have a lack of owner
occupier appeal. She says that owner occupiers
are the property buyers who push up prices,
largely due to their emotional involvement. Owner
occupiers are not interested in buying s