Ziggurat buys student flats in Edinburgh

TWO former directors of Unite, the UK's largest student accommodation provider, have joined forces and acquired a student residence in Edinburgh for an undisclosed sum.

Jim Pike and Matthew McAdden last year launched Ziggurat Student Living. The duo, backed by Spanish bank group Santander and syndicates of private UK investors, aim to develop and manage 500 to 1,000 student residence beds in the capital.

The 148-bed residence in the Sciennes suburb of Edinburgh is currently let to the University of Edinburgh until 2012. After this time, Ziggurat will refurbish the building and let it to students directly.

Pike admits prices will be going up for tenants.

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"The rent is artificially low because the university's remit is to break even, not take as much money from the students, whereas our remit is to maximise returns to investors," said Pike.

The Sciennes residence is the second development that Ziggurat has secured in Edinburgh. In March the firm won planning consent to refurbish a former office, Wellgate House on the Cowgate, into a student residence.

Ziggurat acquired the building for 1.8 million and expects it to be worth 6m following its refurbishment, which is due to be completed in time for Festival season this year.

Ziggurat says it will remain "very focused" on the Edinburgh market after rivals Unite and Opal ceased further development in Scotland. Although Unite operates five student housing schemes in Edinburgh, the company was forced to take on new investors during the credit crunch to reduce its debt. The firm has since restricted its focus to developing student accommodation in London.

The Ziggurat founders expect that universities facing funding cuts will increasingly look to the private sector to offer student accommodation.

McAdden said fears that a number of English universities facing funding cuts are on the brink of insolvency was not a risk in Scotland.

"For a university to go bust in this country is a shocking event. But the reason we are focusing on Edinburgh is it is not going to happen in Edinburgh," he said.

Pike said the firm would target a further eight to ten sites over the next two years.