The Opal Property Group Legacy

Opal Property Group are hitting the Press daily/ weekly at present as more and more of their SPV development companies are being put into administration. First to fall was the Construction arm of the business, Ocon Construction. There has been speculation over Opal’s position for many months, but I have resisted commenting too much to date. Until very recently we were working with Ocon on major projects at the University of Liverpool and Loughborough University.

Stuart Wall founded Opal and over the last 25 years has built the business up to 20,000 student bedrooms, amounting to a £1bn property port-folio. They are a major player in the Student Living sector alongside Unite, UPP, Liberty Living and others. Its no secret that they have suffered major financial problems over recent years with their lending facilities. The crux of the problem is that they have fallen into a trap where their property loan to values are in excess of 100% and the banks wont support them any longer. Despite the fact that their operational business is still strong and generates a lot of annual income, probably around £100m.

I have personally, through our business, worked with Opal since 2006 and our work with them became the platform that we have built our strong student living profile on. I know Stuart personally and have built many strong business relationships with past and current Opal people. I am therefore personally saddened by recent events. I wish everyone who remains part of the business at this time the very best for the future and I hope to work with some of those people again.

chettlesSo what will become the legacy of Opal?

From my perspective I am in no doubt that my work with Opal created a personal profile for me and our business in the sector. I would even go as far as to say that my career progression can be linked to Opal. Today we work with many public and private clients in the sector and have delivered around 11,000 student bedrooms and counting. Off the back of our sector profile I have been invited to talk at the forthcoming LD Events Student Housing conference in London on the 15th May. I will therefore always owe a debt of gratitude to Opal and their people, past and present. We continue to work with a number of people with previous links to Opal, and I am a firm believer in maintaining positive relationships with everyone I do business with. Profile and reputation are both hugely important, especially in these continuing challenging times.

The big question on everyone’s mind though is what will happen to Opal going forward. They are a high profile operator of Student Accommodation. Will their 20,000 beds be sold? Who will buy them? Is there an appetite to buy them? Could this potentially devalue the asset class in some cities/ regions? I don’t know the answers to some of these questions at the moment, but it will be important to understand what the wider implications of this will be.

The Student Living sector is in a time of change. Universities fees, entry requirements and affordability are key challenges the sector faces. The International H.E. sector is growing as well which is interesting and potentially poses a risk to the UK. I met Prof. Brian Cox last week at MIPIM and he was talking about the importance of our H.E. sector, in both academia and research. I believe the government need to focus much more on the economic value of Higher Education in the UK. It should be a key component to sustaining our economy going forward and at present the Government are not properly supporting this.

So we will see what becomes of Opal and indeed the wider Student Living and Higher Education sectors in the coming months. I wish Stuart and all of the Opal Group people the very best at this tough time and thank them all for some very positive business in previous years.

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3 thoughts on “The Opal Property Group Legacy”

  1. Nick, a great post.
    I think your question with regards to the sector’s reputation is a valid one, but one which hopefully can be addressed sooner rather than later.

    I believe and hope that the market will continue to flourish and grow, whilst delivering strong income for owners, provided, of course, that we adapt to the changing needs of our audience (something which I know your practice is particularly focused upon) and that HE, as you pointed out, is recognised as a key contributor to UK PLC.

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