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Student accommodation

Student accommodation continues to offer strong investment returns

Author: Staff





Despite potential challenges such as a slight decline in the number of higher education applications in 2017, student accommodation remains a highly attractive asset class that delivers strong returns for investors.

That is one of the key themes highlighted in the UK Student Accommodation report from property services firm CBRE, which revealed that 2017 was “another big year for investment in student accommodation”.

A strong trend continues

Some £4.68 billion was invested in this particular asset class, marking the continuation of an upward trend in investment volumes.

Analysis of 201 student accommodation schemes and nearly 59,000 bed spaces showed total returns of 9.58 per cent in the 12 months to September 30th 2017. Average net rental growth was nearly three per cent on a national level – weighted between 5.38 per cent for London properties and 2.15 per cent for regional towns.

These strong results were recorded despite a 2.6 per cent drop in the number of people applying for higher education places between 2016 and 2017. This was the second consecutive fall in applicants.

March 2018 data from the Universities and Colleges Admissions Service (UCAS) showed a two per cent decline in applicant numbers compared to 2017.

However, UCAS, Universities UK and other bodies have attributed this trend to the current temporary decline in the UK’s 18-year-old population, which will begin to reverse in 2020.

Analysis of the 18-year-old population in isolation showed that members of this age group are more likely than ever before to go into higher education, with more than 37 per cent making applications for universities and colleges through UCAS.

Furthermore, figures for 2018 have shown that the UK remains popular among international students, with two per cent growth in applications from within the EU and an eight per cent increase from non-EU countries.

Strong demand and undersupply

Taking all factors into account, CBRE emphasised that the student accommodation market is showing consistent strong performance, attracting a steady flow of investment and delivering clear returns.

Ongoing demand from students – from within the UK and further afield – combined with the fact that the market remains under-supplied in terms of available property, means investors can expect high occupancy levels and strong rental yields.

These trends are likely to continue heading into 2019 and beyond, providing a positive environment for those who decide to invest in student accommodation.

Click here to find out more about Experience Invest’s latest high yielding student property investment, Opto Student Newcastle.

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