ADIB provides financing for Co-Living accommodation in West London

Abu Dhabi: Abu Dhabi Islamic Bank (ADIB), a leading Islamic financial institution, has provided Hallmark Estates with a new finance facility to refinance The Stay Club North Acton, a prime best-in-class 270-unit residential co-living scheme located in North Acton, West London.

The Stay Club North Acton boasts a 100% occupancy rate, illustrating the robust tenant demand and limited supply in the residential market.  The property benefits from an EPC rating of “A” and is a well specified and offer extensive amenities including a gym, laundry facilities and concierge services, ensuring a high standard of living.

This deal marks the second phase of the project with ADIB’s financing the initial phase, comprising 343 units in June 2023.

Paul Maisfield, UK Chief Country Officer at ADIB commented: “Despite challenging market conditions, we continue to offer selective Islamic structured financing solutions to our clients, facilitating both refinancing and new acquisitions. These achievements occur amidst a challenging UK Commercial Real Estate market, which has seen significant correction in capital values over the last 18 months due to a higher rate environment, impacting investment activity.”

Maisfield added: “There is a strong emphasis on the sustainability and growth prospects of rental income, to drive returns and service debt. Consequently, rigorous due diligence on asset quality, ESG credentials, and sub-sector supply and demand dynamics is paramount. We have observed strong investor demand for the ‘Living Sectors,’ particularly high-quality purpose-built student accommodation (PBSA), build-to-rent (BTR) and co-Living assets, which score favourably on the above criteria fuelling robust rental income growth.” 

With a strong track record in offering bespoke and competitive Sharia-compliant property financing solutions for its clients in the UK, ADIB has closed senior financing transactions of over AED 3.5 billion (£750 million) in the last 5 years. The bank’s London-based team offers financing support and advisory services for GCC clients looking for commercial and residential property investments across the UK.   

Recent deals closed by ADIB in the ‘Living Sectors’ include structured financing a 300-unit PBSA building in Kingston upon Thames, a 90-unit PBSA building in Manchester and a portfolio of residential assets in Manchester comprising over 160 apartments.

According to JLL, investment in the UK commercial real estate market totalled £8.1Bn in Q1 2024, 4% below Q1 of 2023 and 30% below the 10-year Q1 average.  The living sectors have overtaken office for the second quarter running, with volumes reaching £2.5Bn in Q1 2024, and making up for 31% of total volumes.  The office sector accounted for a 21% share of investment activity in Q1 2024 with volumes reaching £1.7Bn, followed by retail at 18% and industrial at 15%.  International investors remain highly active in the UK, accounting for 50% of total transaction volumes.