New Sprefs and Coral product links to student accommodation

The Luxembourg-domiciled portfolio, which is expected to raise roughly £100m during its first year and will target returns of 8-10 per cent, aims to profit from a historically low correlation to other asset classes, including property.

It will initially invest in the vehicles of established UK providers, but also consider schemes elsewhere in western Europe. Currently, the major alternative student accommodation funds are chiefly accessible to institutional investors only.

Alternative student accommodation benefits from the 31 per cent rise in student numbers over the past decade. In the UK, university-maintained properties are meeting only 23 per cent of demand for beds, according to Sprefs. Occupancy rates are more than 95 per cent on average.

However, although bad debts are currently below 1 per cent, investors are fearing greater default rates on all asset classes this year as the financial crisis takes its toll.

John Kennedy, Robert MacDonnell and Lawrence Frampton will manage the fund. Sprefs will act as investment adviser and provide the strategy for choosing individual portfolios.

Mr Kennedy, who marketed the first student accommodation fund from Brandeaux in 2000, said: "Student accommodation is an investment that is easily understood by the general public. It’s a supply-and-demand story and immediately relevant to most people through their personal experience. It has now become recognised as a sector in its own right."

The AMC on the fund is 1.5 per cent. There is no minimum investment. The portfolio will be a subfund of the Coral Portfolio SCA-Sicav-SIF.