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.

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.