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