Picking the Right Student Property Investment

Previously, we discussed how the UK’s world-class educational institutions have attracted students from all over the world, driving demand for commercial student property. Today, we talk about where to invest in commercial student property.

An artist impression of the interior of London Spring Place, a student property in the UK.
Rooms in purpose-built student property in the UK are fully-furnished and well-equipped with attached bathrooms, some come with kitchenettes,  and communal study and recreation areas. Above: an artist impression of the interior of London Spring Place, a student property in the UK.

Britain’s is known for its world-class education. And with the rise in student numbers comes the demand for proper student housing. Knight Frank and Savills reports that student property now stands as the fastest-growing property sector in the UK, with demand consistently exceeding supply – unsurprising, considering that the student population is expected to exceed its current 2.3 million (and counting) by 20% – 30%  in the next 5 years according to the Department for Business, Innovation and Skills.

Cities like Birmingham, Bristol, Exeter, Liverpool, Manchester, Newcastle and Sheffield have been touted as some of the best places to invest in UK student property. Here’s why: these cities are home to universities that are members of the prestigious Russell Group. Russell Group universities rank highly  in the UK university league tables, attracting higher enrolment which, in return, creates steady demand for accommodation. Simply put, the more renowned the university, the stronger the rental market.

Let’s take Cambridge and Newcastle as examples. The universities in both cities are constantly expanding and evolving, and this has a direct impact on the investors’ profits.  Cambridge city’s population is expected to increase more than 20% in the next decade, which will lead to an increasing student rental sector . Newcastle, on the other hand, being one of the largest universities in the UK, houses more than 31,000 students from 130 different countries.

Of developers and builders, there are many, but when it comes to investing in property, the credibility  and experience of a developer is crucial..

Student accommodation located closest to universities, the city centre and which are within reach of amenities are likeliest to have the highest demand. Research has also shown that students have become more discerning and want to be treated like true customers, preferring accommodation with first class facilities like quality living space, high-speed bandwidth and communal sections that encourage optimum interaction.

Investors should consider investing in student property brands that are credible and have a track record. There are many players in the market, but not many with expertise and experience. 

The Most Resilient Investment Asset Class in the UK

Commercial property is popular among investors. One of the best commercial property investment assets in the UK is student property. Why? Read on and find out.

Image from: https://csiprop.com/liverpool-hotspot-for-economic-population-growth/
The media is currently rife with news regarding student property, better known as purpose-built student accommodation (PBSA), in the UK. The immense potential it holds for property investors is clear, especially when one zooms in to the facts and figures buttressing the continuous success of the student property sector:

Beating Brexit: Investment & Return Rates in Student Property Sector Continue to Climb

Perhaps the best measure of the resilience of the student property sector in the UK is how well it has fared financially despite the economic recession that followed the announcement of Brexit. Based on the latest report from Savills, student accommodation investment currently stands at £5.3bn, which surpasses the £4.5bn spent in 2016. Worth mentioning is the fact that barely eight years ago, the total investment in the student property sector was a mere £500m!

According to CBRE’s student accommodation index, between 2012 and 2016, annualised returns for the sector added up to an impressive 11.8%. This percentage holds even greater value when compared to the smaller yet still reputable figures that rose from the residential sector and commercial property sector as a whole, which were 7.8% and 7.4% respectively.

High Demand for Commercial Student Property 

In a recent report, David Feeney, Head of Student Analytics at Cushman & Wakefield said: “More students than ever are demanding a bed in purpose-built accommodation. This, coupled with pressure on local housing markets, means that demand for purpose-built accommodation should remain strong. However, micro-market knowledge is essential to investment success.”

Worth taking note of is Feeney’s emphasis on the gravity of thorough research before investing; location, demand and regeneration schemes are among the key factors in finding the ideal investment. Recently, Matt Stevens, Director of The Mortgage Genie, shared the top buy-to-let hotspots that are set to offer the most competitive returns in 2018. Manchester, Liverpool and Gateshead take the top 3 spots. Manchester and Liverpool, specifically, are home to a number of reputable educational institutions where PBSA is a major concern. These areas are where investors can expect to fetch high yields with long rental assurance in the student property sector.

Natex, one of the latest and most iconic PBSA developments to date, located in Liverpool.
Natex, one of the latest PBSA developments to date, in Liverpool.

International and EU applicants to UK Universities Still Rise

International applicants to UK universities continue to increase, in fact, the number of international applicants rose by 11.1% to 58,450, which is the highest number on record! Latest UCAS figures show that the number of applications by EU and international students for university places in the UK has increased to over 100,000 for the first time – this is a rise of almost 8% compared to the previous year!

Conclusion

The student property market in the UK, underpinned by both the superior quality of UK education and a structural undersupply in student housing, continues to attract investors from all over the globe.

Interested in investing where the yields are good and the risks are low? Liverpool is a great place for student property investment. First, find a good consultancy to guide you through the process and give you sound advice. 

World-class UK Education Drives Demand for Commercial Student Property

The UK is the top destination for education in the world. Liverpool, one of the top university cities in Britain is especially popular. As more overseas students flock to the UK to further their studies, the demand for commercial purpose built student property increases. Studies show that students have become more discerning of the spaces that they choose to live in; living in cramped HMOs — with no privacy, security, communal spaces or lifestyle amenities — is no longer a popular option.  

When one thinks of education in the UK, a series of stars and superlatives must spring to mind, perhaps even images of the neoclassical dome and cupola of Radcliffe Camera in Oxford University! A denouement everyone undoubtedly reaches when it comes to education in the UK is that it is invariably on top of the game (bringing the property market along with it following a high demand in PBSA).

The Times Higher Education World University Rankings 2018 was recently released, revealing that Oxford University took first place with Cambridge University coming in at second place!

Also issued around the same time is the QS World University Rankings 2018, showing a significant number of UK universities in the top 100. The University of Cambridge landed itself in the top 5 rankings, with Oxford occupying the 6th spot. University College London (UCL) and Imperial College London come right after, taking the 7th and 8th spots, respectively. With almost half of the top 10 list belonging to the UK, Britain proves that its education system remains unparalleled.

University Applications in the UK Are Increasing

The success in the UK’s education sector is reflected by the mounting number of university applications. According to The Universities and Colleges Admissions Service (UCAS), the number of applicants from the EU increased by 3.4% to 43,510, a number that is slightly down from 2016’s recent-year high of 45,220 applications but that nevertheless reflects a reversal of the notable dip in admissions volumes registered a year ago. Also worth noting is a 3% rise of  EU students applying for places as undergraduates from the same point in 2017, and — the second highest number of EU applicants recorded. Adding to that is the number of international applicants (non-EU students) which increased by 11%, its highest ever number by far.

Additionally, application rates from English 18-year-olds have reached a record high, increasing by 0.4% to 37.4% from the last year!

Source: https://fullfact.org/education/are-university-applications-falling-uk/ UCAS figures show application rates for 18-year-olds are increasing
Source: https://fullfact.org/education/are-university-applications-falling-uk/
UCAS figures show application rates for 18-year-olds are increasing

Universities To Guide the UK Towards Becoming a World Leader in Technology

Worth mentioning is the UK’s education sector emerging as a top destination for the next digital age. Recent news highlights how the UK is directing funds and resources towards their goal to succeed as a knowledge economy — world-leading university research is crucial to achieve their aim. This decision was made under the notion that keys to the future of tech such as AI and deep learning, automation and predictive analytics have all started life in a lab or classroom and not in a traditional software development environment.

Where this ambition manifests itself is where economic growth is expected to prosper best. The city of Liverpool, where the Knowledge Quarter is being established, is a prime example of this.

Liverpool Expands to Welcome Education Sector

Liverpool’s £2bn expenditure to establish a 450-acre Knowledge Quarter as one of the world’s leading innovation districts in science, innovation, education, technology and the creative and performing arts, will further reinforce its status as one of the best student cities in the world!

Such conditions inevitably casts attention on the undersupply of Purpose Built Student Accommodation (PBSA) in Liverpool.

Found below are figures that illustrate the dire shortage of PBSA in Liverpool as of late 2017:

  • Student Population: 67,000
  • Amount of Housing Available Through University: 4,500
  • Amount of Total Student Housing Available: 17,857
  • Potential Yields: 8% per annum

With this shortage in mind, it would only be beneficial for the savvy investor to take a look at how to get involved in the student property market there.

Natex, one of Liverpool’s latest and most iconic PBSA developments to date, offers investors 9% returns, assured for five years. The 566-unit student accommodation scheme is approximately a 5-minute walk from two of the UK’s top universities: University of Liverpool and Liverpool John Moores University — it boasts all the facilities a student would ever need.

With Liverpool’s Knowledge Quarter and education centres in mind, and the investment potential of purpose-built student accommodation, it would be a good idea to dip your toes into the pool of Liverpool’s looming success as soon as possible!

Natex is an impressive upcoming 566-unit student residential scheme in Liverpool city. Source: https://csiprop.com/our-uk-projects/
Natex is an impressive upcoming 566-unit student residential scheme in Liverpool city.

Dementia Adds to UK Housing Supply Woes

Care and support are what they need from us.

In  a previous post, we talked about the ageing population in the UK and the implications it has on housing and opportunity it offers property investors.  One of the main issues afflicting the ageing population in the UK is dementia — a crippling disease that is now the leading cause of death in England and Wales. Caring for dementia patients is not a walk in the park. It requires proper care housing — something that is currently critically undersupplied in the UK. By 2035, some 100,000 dementia sufferers will have no beds. 

Care and support are what they need from us.
Care and support are what the ageing — and those suffering from dementia — need from us.

Maureen:  a strong woman to a man named Michael. They have been married for 56 years and blessed with two daughters, three grandchildren and six great-grandchildren. Life was beautiful until, one day in 2011, Michael was diagnosed with mixed dementia. Mixed dementia is a condition where changes representing more than one type of dementia occur simultaneously in the brain.

Things go upside down for Maureen. Michael no longer recognises Maureen,  the one that he used to embrace. He began to think that he was cheating on his own wife whenever he and Maureen were together.

However, Maureen patiently took care of him, until she decided to send him to a care home in 2016 so that Michael will get proper treatment.

“Caring for someone with dementia is like living on a knife’s edge; it is so unpredictable and certainly has its challenges. You go through so many mixed emotions: pity, anger, frustration and even despair,” said Maureen.

In Sheila’s case, things went from bad to worse. She remained in denial when her husband, John, was diagnosed with dementia until one night when he tried to push her down the stairs. Luckily, Sheila managed to escape.

Sheila drove around the village, her eyes blinded by tears. She could not accept that her husband had attacked her.

“When I returned, John began pelting me with fruit. I tried to ring Social Services but all I got was an answerphone. So, in desperation, I called the police. By the time they finally arrived, John was calm and smiling as though nothing had happened,” said Sheila, who, for the sake of her safety, had to send John to a care home for better supervision.

These are true accounts of what has happened among dementia patients and their loved ones.

Dementia haunts England

Dementia is a neurological disorder that affects the human brain. Dementia, depending on its type, can affect people in many ways, changing everyday life physically, emotionally and psychologically

Dementia is now a common disease in the UK — in fact, it is now the biggest cause of death in England and Wales, surpassing heart disease. Research shows that from 2011 to 2016, there has been a 56% rise in the number of people diagnosed with dementia in the UK.

The figures illustrated the number of dementia patients in the UK, from 2011 until 2016. Info source:Alzheimer’s Research UK.
The above figures illustrate the number of dementia patients in the UK, from 2011 until 2016. Info source: Alzheimer’s Research UK.

According to Alzheimer’s Research UK, there are now 532,162 dementia patients in the UK. England alone has the highest number of patients, constituting approximately 84% (451,561)of UK’s total number of dementia sufferers.

This number will increase in the future as the UK’s ageing population continues expanding every year.

Undersupply:  thousands of dementia patients will end their lives ‘alone’

Let’s not forget to fight for those who can’t remember.
The number of dementia patients among the elderly will continue to increase as the UK’s ageing population continues expanding every year.

Dementia has become a real issue  in the UK, both in the urban or rural areas.

Meanwhile, the whole country faces a chronic undersupply of care home even as demand escalates.

The Alzheimer’s Society predicts that the gulf between demand and supply for care home beds in England alone will reach 30,000 by 2022. This number is estimated to increase  to 100,000 by 2035.

It means that thousands of vulnerable elderly people with dementia will end their lives ‘deserted and alone’ if this problem  remains unsolved, warned Alzheimer’s Society  chief, Jeremy Hughes, adding that it may become a ‘norm’ for care homes to cherry-pick the residents and fend off those with severe dementia.

To make matters worse, the British government has, without reason, decided to reschedule the publication of a long-awaited Green Paper that sets out plans for how to improve  care, support and funding for the elderly.

The publication of the Green Paper, originally earmarked for summer 2017, has been postponed several times. It has now been  further delayed to the autumn of 2018.

Jeremy Hunt, the then Secretary of State for Health and Social Care, said, “Whilst the long-term funding profile of the social care system will not be settled until the spending review, we will publish the social care Green Paper ahead of that.

“However, because we want to integrate plans for social care with the new NHS plan, it does not make sense to publish it before the NHS plan has even been drafted. So we now intend to publish the social care Green Paper in the autumn around the same time as the NHS plan.”

In June 2018, Theresa May, the Prime Minister announced additional annual increases in funding for the NHS of 3.4% per annum, amounting to an extra £20.5 billion a year by the 2023/24 financial year. This will include the expenses for dementia patients.

The government also noted that a number of proposals will be set up to ensure the dementia people will live healthier, longer and more independent lives, instead of isolated and lonely.

Unfortunately, if things remain the way they are, with the supply of adequate housing remaining in the negative, and the  continual postponement of the Green Paper, thousands of vulnerable older people with dementia will end their lives ‘isolated and alone’.

Thus, it is left to the private sector to help develop more care homes to address the serious undersupply in the UK. Here,  care homes investors have an investment opportunity which gives them a chance to not only profit their pockets, but at the same time, do something good for the society, especially for the elderly, so that they have dignity in the last few years of their lives.


Images sources:

UK’s Ageing Population Offers Lucrative Investment Opportunity

United Kingdom, like the rest of the world, is ageing. Britain’s ageing population has brought to the surface, issues surrounding proper care housing. Found below is a compilation of statistics regarding England’s elderly population to illustrate  how the UK care homes market has claimed the title  of ‘stand out asset class’ for investment and how this claim is likely to be retained.

What entails England’s stately developed country is an equally impressive population growth. Predictions made from the Office of National Statistics (ONS) presents the specifics of England’s future population:

According to latest figures by ONS, the UK’s population in 2016 was at its largest ever at 65.6 million, and is projected to reach over 74 million by 2039, ascribable to higher birth rates and immigration rates.

This projection by the ONS which shows the distribution of the UK population from 1976 – 2046 depicts an ageing society in the UK that is growing where other age groups are reducing.
This projection by the ONS, which shows the distribution of the UK population from 1976 – 2046, depicts an ageing society in the UK that is growing where other age groups are reducing. Source: ONS

An Age-diverse England

A growing elderly population is inevitable in the face of an expanding population, paired with increased life expectancy in the UK. In 2016, the old age dependency ratio (OADR) revealed that for every 285 people aged 65 and over, were 1,000 people aged 16 to 64 years (i.e. the traditional working age). The number of those aged 65 and over is expected to rise, with 157 local authorities looking at an OADR of about 500:1000 by 2036 compared to only 11 local authorities in 2016.

Even more bewildering is the fact that West Somerset is projected to have an OADR of 928 by 2036 — there will pretty much be the same number of those aged 16 to 64 years as those aged 65 and over!

Furthermore, over the next 25 years or so, one in 12 people will be aged 80 or above, with centenarians being the fastest-growing age group!

Source: http://lifeofayouthpastor.com/the-big-100/
The number of centenarians in the UK is growing! Image source: http://lifeofayouthpastor.com/the-big-100/

The predictions made above show UK’s population pyramid evolving into more of a rectangle — ONS predicts that the number of those aged 65 and over will grow to nearly a quarter of the population by 2046!

Such figures perforces more attention to be directed towards older citizens whose well-being requires special care. In most cases, this special care is presumed to be provided by adequately established care homes.

However, this has not been the case in the UK.

The UK Care Home Crisis

Like any other country, the UK, too, depends greatly on well-run care homes to provide special care for its burgeoning number of seniors. However, a closer look at care homes in the UK shows a critical undersupply for corporations to act on.

Knight Frank’s UK Healthcare Development Opportunities 2017 report identified a decrease in the number of registrations of both new care homes and new beds. Combined with the long-term trend of increased deregistrations, this has caused a nett loss of 166 homes and 2,612 beds across the UK market as of September, 2016.

Research by charity outfit, Independent Age revealed that overall, a quarter of homes were rated as either inadequate or requiring improvement in January this year with the worst region being the Northwest (this includes Stockport, Salford and Manchester). Which is why there is an increasing need for properly built, fully-functional care homes that cater to the varied needs of the aged and infirm.

Research by charity outfit, Independent Age revealed that overall, a quarter of homes were rated as either inadequate or requiring improvement in January this year with the worst region being the Northwest (this includes Stockport, Salford and Manchester).
Research by charity outfit, Independent Age revealed that overall, a quarter of homes were rated as either inadequate or requiring improvement in January this year with the worst region being the Northwest (this includes Stockport, Salford and Manchester).

A Quick Look At Those Affected By The Shortage

Image on the ageing statistics in the UK taken from csiprop.com website. 
Image on the ageing statistics in the UK taken from csiprop.com website.

 

Dementia, replacing heart disease, has become the leading cause of death in England and Wales. There are currently 850,000 people with dementia in the UK, with numbers set to rise to over 1 million by 2025, soaring to 2 million by 2051.

The sizeable amount of dementia-afflicted citizens (850,000) compared to only 416,000 people of varying illnesses who do live in care homes in the UK, illustrates the worrying issue at hand.

To put into staggering percentages, 96% of the population aged 65 years and over and 84% of those aged 85 and above are completely unattached to care homes (Laing and Buisson Survey 2016).

Dealing with the Crisis: Good news for England’s Older Citizens & Property Investors

Source: http://www.vulture.com/2016/05/grace-and-frankie-recap-season-2-episode-5.html
Source: http://www.vulture.com/2016/05/grace-and-frankie-recap-season-2-episode-5.html

Julian Evans, Knight Frank’s Head of Healthcare said, “The disparity of care bed supply and demand presents increasing opportunities for investors, and, combined with the fall in the sterling, has generated a truly global appetite for the sector. This sector is likely to be the stand out asset class of 2017, particularly for those investors wishing to diversify their asset portfolios in the current uncertain economic climate.”

The care home sector has high prospects for continued success going into 2018 — in January 2018, carehome.co.uk had its highest ever traffic to the site with 1,579,285 visits. This was up from 1,144,572 in December 2017, with an increase of 38%!

Moreover, recent news highlights that demand for care home places will soar by more than three quarters in less than 20 years!

CSI Prop director Virata Thaivasigamony on the company’s website, compares the incredible growth potential of care home sectors with one of UK’s top investment asset class: purpose-built student accommodation.,

“The undersupply of care homes has created opportunities for investors. With the UK’s ageing population, care homes investment could be the next student property investment.”

Also highlighted by the director is the average cost of £574 per week at a care home facility in comparison to Britain’s residential property rent that averages at £212 per week — this inevitably constitutes very impressive returns!

It is evident that the care home sector, subject to the same law of economics that observes every other form of investment, is very likely to be on the side of the investor — demand for more care homes and care beds is peaking and undersupply continues to be an issue.

With all said and proven, the prudent investor would find it in their best interest to consider the UK care home sector. After all, returns, in this case, seem to be almost absolutely guaranteed.

The Hitchhiker’s Guide To Property Investment

The world of investment, much like a candy stall, has a wide variety of selections. From unit trust to the stock market, to land, and all the way to agarwood, it seems like you can invest in pretty much everything. Whether you consider yourself illiterate in anything related to investment or believe yourself to be quite the opposite, stability and low risk are the words you most likely inherently trust, which is the case in property investment- places with high population growth and is strategic in its location are most likely to bring the best returns.

Where the stock market can become as unpredictable as radioactive substances, property investment is as steady as investment can get. Where unit trust is a form of investment that is not tangible and agarwood investment is not exactly subject to the most positive conditions, property investment gives you satisfying returns.

With a burgeoning human population comes the burgeoning need for sustenance and industry. This, in turn, pushes the need for jobs, schools and tertiary education institutions which are all inevitably related to an increase in the demand of housing spaces. With that in mind, the decision to purchase property to put up for rent can be a sure-fire way of receiving satisfying income.

Property investment stands on a pretty steady pedestal, allowing for a smooth transition towards the next step: where and what to invest in. Buying locally for investment is not quite an option – at least not in Malaysia, Hong Kong and Singapore – what with the respective federal government’s strict housing regulations, and property prices skyrocketing at an absurd pace and altitude. The right step to take would be to invest in overseas property. Locations where jobs, industries and higher learning institutions flourish as well as where the local authoritative figures make an effort to better the vicinity are ideal when it comes to pinpointing exactly where to invest your money.

Listed below are some pointers that will keep you on the right track: 

1. Follow The Money

An important point invariably deserves a repeat: where jobs, industries, higher learning institutions, and active locality improvement blooms is where you would like to invest in some rooms.

2. Leave the past in the past

It is common to doubt the success of new or previously criticized areas. This does not, however, make such places immune to improvement. There are many examples around us already — Pasir Ris and Jurong in Singapore, as well as Sentul and Brickfields in Kuala Lumpur. The most noteworthy example of a successful revamp is the one that happened to Bangsar. Believe it or not, Bangsar used to be rat-infested, water-logged and prone to floods. It is now one of the most expensive places in KL.

It would be a good idea to look at the progress of your location of interest. Specifically, on the expansion of the area, the improvement occurring or are set to occur and the developers that are zooming in on the place.

3. Buy the type of property that is most “lettable”

In certain places, two-bedroom houses and flats appeal to the widest range of potential tenants. Large family homes are not recommended.

4. Don’t be restricted to your own immediate area / expensive areas only

Expensive areas do not necessarily garner good rental prices. Property located further away may cost less but may still fetch good rental yields.

5. Ensure the locale is a thriving one for tenants

Places that boast convenience such as having supermarkets, universities and amenities nearby will be the highest in demand.

6. A letting agency is a good thing

Read up on your property of interest for additional security then allow your property to be taken care of by a letting agency.

7. Check out the developer

Like all that is new, newer developers are subject to more doubt than its well-documented seniors; many would argue the latter is a wiser choice. However, joint venture partners, financials and choices of location are definitely worth paying attention to when it comes to understanding what your new developer has to offer.