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Student accommodation

International trends bode well for student property investors

Author: Staff

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Student accommodation is one of the most reliable and potentially profitable property investments on offer in the UK.

One of the various reasons for this is the reliability of demand from people coming to study in the UK from abroad, a trend highlighted in a recent report from Knight Frank and UCAS.

Strong international demand

There has been a lot of debate and speculation about how Britain’s impending exit from the European Union could affect various industries, investment markets and components of the economy in the UK.

For investors in purpose-built student accommodation, one aspect of the sector that doesn’t appear to have been affected by Brexit is international demand. This is a key consideration for investors, as international students could have a greater willingness to pay a premium for high-quality housing located near their college or university campus.

In the Knight Frank/UCAS Student Accommodation Survey for 2018/19, it was revealed that the number of higher education applications from overseas has been rising steadily in recent years.

Knight Frank UCAS report

International students now account for approximately 14 per cent of acceptances through UCAS. Some 86,000 individuals from foreign countries enrolled in UK universities as undergraduates in 2017-18, according to the Higher Education Statistics Agency.

The latest research findings underlined some of the key patterns within this group. International students are the most likely to rent, with 94 per cent doing so, compared to 70 per cent of UK-based undergraduates. This means more than 250,000 people coming from overseas to study in the UK are renting property every year.

Furthermore, international students are among the most likely to remain in the same accommodation for sustained periods, which helps to assure yields and minimises the risk of void periods for investors. More than four out of ten (42 per cent) said the option to stay in the same place for more than a year was ‘extremely important’ or ‘very important’ when deciding where to live.

Student priorities and future prospects

The Knight Frank research highlighted several key factors that influence international students’ decisions regarding accommodation.

Quality of living space, the location of the property and value for money were all highlighted as priorities, followed by overall cost, the cleanliness of the bedroom and the quality of the furnishings.

knight frank ucas student housing survey

Nearly six out of ten international students (57 per cent) said they would be willing to pay a rental premium for fast Wi-Fi. Just over half (51 per cent) would pay extra for an on-site gym, while 46 per cent said the same about 24-hour security.

The report highlighted other key trends that bode well for the future of student accommodation investment, with applicant numbers from outside the EU expected to continue rising over the next few cycles.

While there is some uncertainty around Brexit, EU applications are also likely to remain on a steady upward trend in the short term.

For investors, it’s clear that the UK’s student accommodation sector will continue to offer strong potential for growth and profitability in the years to come. This is particularly true for those invested in schemes offering the additional benefits international students want, such as fast Wi-Fi and on-site security.

Experience Invest is currently providing a number of investment opportunities in this market, including phase three of Aura Student Liverpool and around 50 studio apartments at Opto Student Newcastle.

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