Nov

Competition regulator reveals concerns over Birmingham’s BTR market

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The Competition and Markets Authority has allowed a merger to go through within the build-to-rent market, but its investigation has revealed the hugely international nature of investment in student accommodation in the UK, and its worries over competition.

Since September the CMA has been looking at the proposed take-over of PBSA firm the Student Roost Group by behemoth US firm Greystar and GIC, which is owned by the Singaporean government.

Student Roost is a provider of student accommodation across the UK including in Birmingham and Glasgow, and is currently owned by Brookfield Asset Management, Inc

The CMA has allowed the merger/acquisition to go ahead but has given Greystar and GIC five says to come up with a plan to solve the CMA’s concerns over competition within Birmingham.

Less competition

These are that the merger gives rise to a realistic prospect of a “substantial lessening of competition (SLC) as a result of horizontal unilateral effects in the provision of purpose-built student accommodation in a number of local areas in Birmingham”, the CMA says.

If the CMA’s worries can be assuaged, then the deal will go ahead because, nationally, the regulator found no competition concerns because the combined organisation would have a “relatively modest” share of supply (10-20%) and would continue to face strong competition from other corporate purpose-built student accommodation providers such as Unite, Homes for Students, iQ and This is Fresh.

Colin Raftery (pictured), Senior Mergers Director at the CMA, says: “Aside from fees, rent is the biggest expense students face, and the rising cost of living is putting even more pressure on student budgets.

“Many university towns and cities are already dealing with a student accommodation shortage, which is why it’s crucial that private providers like those involved in this deal are competing effectively.

“We’re concerned this deal could result in students in Birmingham seeing higher prices or lower quality services.

“GIC, Greystar, and Student Roost have accepted our concerns and have told us that they plan address them. A solution that fully resolves our concerns will avoid the need for a more in-depth investigation.”

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