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.