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Student accommodation

Regional student property continues to be star asset class

Author: Gemma





Earlier this year, it was reported that student property was the best performing asset class in the UK for investors, getting them better returns than the likes of stocks and shares and gold. And according to a new report, this has remained the case into the second half of the year, with those investing in student property in the regions particularly seeing fantastic returns.

It is a reality that has led to ‘frenetic’ activity in the student property market, with a growing number of institutional investors now starting to see the asset class as a fantastic way to deliver high yields to investors.

According to the CBRE’s latest UK Student Housing MarketView report, yields in the prime regional student property market are now sitting at 6.15 per cent across the country, which puts it ahead of all other types of investment.

Rosie Young, an associate director in the specialist markets team in the Birmingham office of CBRE, said: “As a result, deals in the sector have been somewhat frenetic. To match the demand and current undersupply, development needs to be amplified.”

Student property is now so popular that demand outstrips levels of supply. However, according to the CBRE, this is not an issue that is easily addressed, because land to build student properties on is not easy to come by.

“The resurgence of the residential market in 2014 means the battle for development sites is now being won by house builders as the end values are much higher.”

She said that any land owners who are looking for someone to sell to are far more likely to sell to a house builder as opposed to someone who wants to invest in the student property market, because the money they get at the end point is higher than it would be for building multi units.

What does it mean for the market then if this happens to be the case? Well, while fewer rooms available is bad news for students, it could actually turn out to be good news for investors. A lack of supply drives up demand among tenants, and this could see yields go even higher than their current 6.15 per cent looking forward.

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