EDUCATION – A NEW CLASS OF PROPERTY INVESTMENT
Published 26 October 2016
With government figures showing that there will be 730,000 more school-age children by 2020 than there were last year, and it is estimated that this will mean an extra 24,287 classrooms will be needed; educational property continues to become and important investment sector, writes Robert Flint.
This is all the more true given the current government’s commitment to expanding its free school programme. Last month approval was given for another 77 new free schools, bringing the total to more than 500 – and applications have already closed for the latest wave of free school applications.
Here in Norfolk, we continue to see expansion in this sector, and the speed of this expansion is opening up new opportunities for property investors. The latest such school to open in Norwich, the Charles Darwin Primary School, has opened in Charles and Wensum Houses, two high-profile former commercial buildings close to Norwich Railway Station, following a deal driven through by Arnolds Keys.
Most of us have grown up with a largely unchanged model of education: state primary and secondary schools under the control of Norfolk County Council, and a private sector which has prospered or struggled according to economic conditions and the performance of individual schools.
The emergence of academies under the Labour government after the introduction of the Learning & Skills Act in 2000 kick-started a revolution in education which continues today. The coalition government’s Academies Act in 2010 added the concept of free schools to the mix.
From a property point of view, this revolution has changed everything. Whereas all state school premises were managed by the county council, once academy trusts started to take over individual schools, they brought a slightly different ethos, recognising the importance of extracting maximum value from their property holdings.
It is important to make clear that academy trusts are not supposed to ‘profit’ from property, in the sense of withdrawing assets from the trusts. Rather, they appear to be more proactive in maximising the value of their property assets so that they can invest more in their core educational activities.
But if academies are taking over existing school buildings, it is the free schools which are providing opportunities in the market.
The Charles Darwin School is the fourth such school in the city, and each of the others is located in buildings which previously had other uses: The Free School Norwich is in a former office building in Surrey Street, the Jane Austen Academy is in Aviva’s former call centre (itself originally a shoe factory) on Colegate; and the Isaac Newton Sixth Form is in the old fire station.
A common theme for all four of these free schools is that the timescale in which they were established precluded purpose-built new accommodation, and as a result all four have involved sizeable property deals with commercial landlords.
The Conservative government is committed to the continued expansion of its free school programme, so this is a sector which cannot be ignored. As investors seek to find new uses for their property portfolio, they need to learn the lessons from those landlords who have successfully embraced the education sector.
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