A Prudent Investment Option - Specialist Student Accommodation
In recent years, specialist student accommodation has become a much sought after investment in the UK. Purpose-built student housing in the UK is one of the UK’s fasting growing property investment asset classes. There is a large population of students in the UK, approximately 3 million total. This is up from 1.8 million just 20 years ago. This sector has grown from a fringe investment to a global market valued at greater than USD $200 billion.
The student property asset class provides relatively high yields which serves to attract private and institutional investors. This trend will continue in the future. Purpose-built student housing in the UK is an affordable option with the opportunity to provide dynamic returns.
Student property is among the most lucrative real estate asset classes according to property investment experts. Demand for specialized student rooms is increasing at a higher rate than the rest of the UK housing market because supply is scarce in all major university cities.
Universities that are good at obtaining overseas students will be among the best investment locations. As these institutions continue to increase their reputation globally, there will be more students coming from abroad. Up to 30% of students now come from abroad at some of the UK’s top educational institutions. These facilities do not have the desire or funding to provide adequate amounts of student accommodation providing an opportunity for the private sector.
Housing options in close proximity to London universities have very low vacancy rates which leads to a demand for specialized student accommodation. With a constantly renewed demand for housing, student accommodation has become an excellent income source for private institutions and landlords. Investors consider it an asset with a typical yield of an assured 7-9% rental return with and very low risk. As a high-performance asset class, UK student housing has the potential to be a safe and lucrative investment opportunity.
Student Housing Investment Increases in the UK
There has been a marked increase in student accommodation investment activity in the UK over the last three years. The value of current stock and development sites sold in 2013 and 2014 have seen significant increases. Currently, the market is primed to have similar high levels of investment activity in the coming years due to the attractiveness of the student housing sector to potential investors.
Families with high net worth are purchasing properties for their students to live in while at university and after graduation, and the property remains with the family as a buy-to-let investment. If you plan to invest in student housing, select areas where an increase in the student population is expected which will result in increased yields. Manchester, Plymouth, Canterbury, London and Croydon are a good options as new educational institutions have commenced or been announced in these areas. Many overseas students in the UK have wealthy families and are willing to pay for superior accommodation.
It is an ideal time to invest in UK student housing as it is currently outperforming all other types of UK property investments. The increasing demand will exceed availability for years to come.
Factors to Consider When Investing in Student Housing
There are several housing options available providing investors with the opportunity to create a portfolio of profitable and hassle-free property investments through student accommodations.
Houses in multiple occupations (HMOs) have been the most preferred choice among investors as they enable landlords to collect multiple rents in a given month. Student pods – a room inside a student block that has shared facilities, including kitchens and bathrooms – have also become a popular investment opportunity recently.