Why invest in Student Accomodation?
A Prudent Investment Option
Specialist Student Accommodation
The student property asset class provides relatively high yields which serves to attract private and institutional investors.
Student property is among the most lucrative real estate asset classes according to property investment experts.
Purpose-built student housing in the UK is an affordable option with the opportunity to provide dynamic returns.
Currently, there are approximately 3 million students residing in the UK, representing an increase of 1.2 million in comparison to figures generated just 20 years ago. Hence, this sector has flourished from a fringe investment to a global market, valued at greater than a staggering USD $200 billion.
Current trends are indicative that this trend will continue to rise in the future, with the popularity of undergraduate and postgraduate study showing no signs of diminishing. Purpose-built student housing in the UK is an affordable option, with the opportunity to reap profitable returns; due to a scarce supply of accommodation in many major university cities, demand for specialised student rooms continues to rise at a higher rate than the rest of the UK housing market. Moreover, universities who specialise in the recruitment of overseas students will be among the best investment locations.
Moreover, universities who specialise in the recruitment of overseas students will be among the best investment locations.
Flourishing global reputations of institutions specialising in overseas recruitment will coincide with the increasing numbers of students arriving to study from abroad - overseas students continue to further their education at some of the UK’s leading 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.
Additionally, such are the extremely low vacancy rates for housing options in close proximity to London universities, there is an unprecedented demand for specialised student accommodation. The consistent demand for housing, student accommodation has become an excellent source of income for private institutions and landlords. Typically, investments such as these come with an assured yield of between 7-9% rental return and with 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, Nottingham, 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.
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