Significant investor activity in the student property in the final quarter of 2014 will take the overall money spent on the sector this year past the figure seen a year ago, a new report published by JLL has predicted.
It said that so far this year, £1.5 billion has already been invested in the sector. In addition to this, some £220 million of student stock was also under offer as of the end of quarter three. A further £360 million is already being marketed as well. It is thought that by the end of the year, the total spend of the £2 billion that was witnessed in 2013 will be surpassed.
This would mark the third year in a row that investments in the student property sector had been in excess of £2 billion since this figure was first reached in 2012. Significantly, JLL reports that 65 per cent of the investment in this area in 2014 has come outside of London, showing the real strength of regional investment.
Philip Hillman, head of student housing investment at JLL said: “We are predicting a flurry of deals to near completion before the year draws to a close, with strong university enrolments and robust occupancy levels across the sector proving to be a key driver.”
“In particular, we expect to see secondary disposals come to market following realignment of purchased portfolios this year and an increase in forward funding transactions, particularly in the regions. Also, with the uncertainty of the Scottish referendum now removed, we expect to see more transactions take place north of the border.”
The reasons for such an uptick in investor sentiment towards student property is clear to see. JLL data indicates that land values for well-located sites have climbed by 25 per cent in the last year, while yields continue to improve for those properties that are located in good areas and are of high quality.
Students are increasingly looking for top quality places to live in recent years, and many investors can now benefit from putting their money into passive investments that allow them to buy fully-managed properties below market value, with guaranteed returns for a set number of years.