Student property has been a strong asset class for a number of years, but 2015, the year in which money pouring into the sector doubled, was truly the one in which it was accepted as a mainstream option, moving away from the niche reputation it has had for some time, even as its prominence grew.
As well as the rise in investment, which took money spent to over £5 billion in the space of a year, other metrics for success in the property market were also positive in 2015, according to the latest CBRE report.
It states that in the year to the end of September 2015, rental prices in the student property market climbed by some 1.94 per cent across the country as a whole. However, yield shift, general property market trends and the weight of capital combined to leave investors with an impressive average return of 18.4 per cent in the 12-month period.
A rising number of students has been one of the main reasons for impressive growth in the sector, both in investment and returns. According to HESA figures, there has been a particularly impressive upward turn in the volume of people studying in the UK from overseas in the last few years. 2014/2015 was the end of the cycle, which saw a seven per cent increase, ending with more than 390,000 international students in the UK.
Continued strong performance and reputation of the UK’s universities and colleges plays into this, and is having a real positive effect on the student property market as demand is sustained nationwide.
So what does 2016 hold for the student property market? The CBRE report suggests that the year will not be quite as strong as witnessed in 2015, but following on from a near-£6 billion investment in just 12 months, this is hardly a surprise.
What we could see is a rise in the volume of build-to-rent projects in the student sector. The sustained rental yield forecast will encourage investment from buyers in the months ahead, but the lack of available properties in the sector could mean more money flowing into new projects and off-plan spending as the year progresses.