Liverpool Student Property: A Foreign Investor Magnet

When investing in UK commercial student property, one should consider investing in Liverpool. Liverpool is a top student city in the UK with a student catchment of more than 50,000 .

UK commercial student property is a bit like treasure; it’s a valuable asset and savvy investors are constantly searching for the X on the map. While the increasing number of local and foreign PBSA investors should be indication enough of the great opportunities in this sector, one would ultimately solidify this belief once exposed to the promising data behind this jewel of a sector.

Foreign Investors Flock Towards Commercial Student Property 

Many local investors have already hopped onto the student property bandwagon, and while that may be expected, the rising number of foreign investors is a little less so. What makes commercial student property investment so popular among both local and foreign investors alike, is because it is a hands-off property investment: commercial student properties are fully-managed by professional property managers,  allowing investors to commit to the venture in the student sector from the comfort of their home countries!

With the UK’s nonpareil education system ensuring continuous demand for PBSA that consistently outweighs supply, overseas investors in search of investments other than residential property will most likely find themselves in the student property sector.

Liverpool Is The Best Student City

While many urban cities in the UK boast reputable universities — it is the UK after all, and lists such as The Times Higher Education World University Rankings and QS World University Rankings prove British educational institutions continue to dominate the educational sector — none of them stand out quite like Liverpool.

A combination of pull factors place Liverpool at the forefront of UK student property investment; alongside affordable prices and excellent rental yields, a unique lifestyle experience continues to attract both local and international students.

Students are initially attracted to the high level of distinction associated with the top three universities in the city: University of Liverpool, Liverpool John Moores University (LJMU) and Liverpool Hope University. The redbrick University of Liverpool is ranked in the top 1% of education institutions in the world whilst Liverpool John Moores University and Liverpool Hope University also rank within the top 75 according to league tables by The Complete University Guide.

The other factors that ultimately mark Liverpool as the best student city is its eccentric culture. Students are enticed by the abandoned warehouse nightlife of the Baltic Triangle, the galleries and museums of the Albert Dock and the unconventional cafés on RopeWalks’ famous Bold Street.

A mesmerising cafe in the Baltic Triangle offers residents an interesting experience Image from: https://confidentials.com/liverpool/bad-santa-liverpool-gets-an-adults-only-grotto
A mesmerising cafe in the Baltic Triangle offers residents an interesting experience

A City for Investors

Liverpool boasts a large student population of over 70,000, which guarantees an abundance of tenants searching for the right accommodation. With most of the top student property developments marking the best student areas near Liverpool’s city centre attractions and university campuses, investors can enjoy choosing from an already promising selection without going through all the trouble.

Adding to Liverpool’s prestige is the Knowledge Quarter, a £2bn regeneration scheme that will lead the city to becoming one of the world’s leading innovation districts, further reinforcing its relevance in this modern digital era!

What every international investor is particularly attracted to is the excellent rental yields — up to 8% nett returns is commonplace in Liverpool’s student property sector! Considering low initial average property costs that provide opportunity for maximum capital appreciation over time, investors would be hard-pressed to find a greater deal.

Interesting in investing in Liverpool PBSA?

There are many commercial student accommodation developments in the pipeline. Natex, one of Liverpool’s latest to date, offers investors 9% returns, assured for five years. The 566-unit student accommodation scheme is approximately a 5-minute walk from University of Liverpool and Liverpool John Moores University — it boasts all the facilities a student would ever need (and more!).

Image Sources:

  • Image from: https://confidentials.com/liverpool/bad-santa-liverpool-gets-an-adults-only-grotto

Investors Should Leverage On High Demand for Student Property

VITA Student, a student accommodation brand in the UK.
VITA Student, a student accommodation brand in the UK.

The UK has long settled comfortably on the top spot of global education. This has been reflected by growing demand for Purpose-built Student Accommodation (PBSA) or UK Commercial Student Property as students from all over the world flood into the UK in seek of highly revered credentials. Across the UK as a whole, full-time student numbers continue to outweigh current PBSA bed spaces by 3:1, despite the pipeline of student accommodation either planned or underway.

Unlike residential property, this sector is seen to be a concrete investment even in the face of global and domestic challenges. Recent data reveals the popularity of PBSA among investors following the undersupply.

Savills reported a 17%  increase in student accommodation investment in the UK this year, and expects investments in the sector  to reach £5.3bn by the end of 2017, surpassing the £4.5bn spent in 2016. Meanwhile, Knight Frank’s UK Student Housing Rental Update reports that headline rental growth for the sector increased by 2.55% for the 2017/18 academic year.  Becoming a private investor in student property is currently trending in the UK, with reports revealing lucrative returns from the PBSA sector for individual investors.

While some of the younger UK population prefer to seek apprenticeships instead of applying for university, the latest analysis by the Universities and Colleges Admissions Service (UCAS) shows that demand for higher education among 18-year-olds remain strong, increasing by 0.4% in 2017 from the previous year. Additionally, the number of applicants from the EU increased by 3.4% to 43,510, a 3% rise from the same point in 2017 and the second highest number recorded. The number of international applicants increased to its highest ever number, by 11 per cent to 58,450.

The act of supplying student accommodation that is both sufficient in number and quality was once under the responsibility of educational institutions themselves, but in recent years, have mostly been provided by private investors and developers. What has been particularly demanded from students are superior quality accommodation which they are prepared to pay higher rents for. This makes the sector very profitable for landlords and letting agents.

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.”

Mike Mitchell, Partner in Cushman & Wakefield’s Student and Residential Investment team, commented: “Across the UK, the PBSA market continues to be one of the most attractive asset classes in real estate for investors. Despite applications to Universities falling by 3.7%, the sector has witnessed year-on-year rental growth. Due to the value of foreign currencies against the Pound, there has been an influx of capital from overseas buyers in 2017 who are now competing with UK purchasers.”

What can be taken away, at the end of the day, is that PBSA in the UK is big business. One fact reinforces this already proven notion, and that is the fact that the UK overtook the US as the largest student property market for the first time in 2015 after reaching a record £6.56bn in investment volumes. — to invest in PBSA in the UK seems to be a pretty solid plan!

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.