Student housing investments
Uncertainty surrounding the future of the UK’s relationship with the EU has done little to dull the appetite of investors in the nation’s student housing investments sector, new research published by Knight Frank has revealed.
According to the company’s 2018 UK Student Housing Research for Q1 this year, the UK is now riding a positive wave of excitement around student property, with investors from around the world flocking to the sector right now.
Momentum building from an excellent year
Knight Frank’s 2018 student accommodation report showed total investment in the UK student property market of £4 billion in 2017 – a 25 per cent upturn on the previous full year. It is a demonstration of the burgeoning aspirations of developers and the growing need for more purpose-built homes in cities up and down the country.
James Pullam, head of student property at Knight Frank, said: “Demand for higher education in the UK remains strong. Universities that are perceived to offer the highest quality courses in locations offering the best overall student experience will increasingly attract higher levels of students.”
It means a positive outlook for the year ahead for the UK student property market, with Knight Frank’s research showing that a record 36 per cent of all UK A-Level students applied to join university courses in 2018. At the same time, the number of 18-year-olds in the UK as a whole is predicted to rise by a further 103,000 between 2021 and 2025, meaning that strong future demand within the sector is also now assured.
Application numbers among prospective students based within the EU rose by 3.4 per cent year-on-year for courses beginning in 2018, while non-EU applicant numbers increased by 11.1 per cent. Overall, this data paints a vibrant picture for the future of UK higher education and its popularity around the world.
However, with such strength of interest comes the need for an ever-greater volume of student accommodation. Thankfully, student accommodation investment opportunities are available through industry experts like Experience Invest.
Search for quality is driving the market
In recent years, a downturn has been witnessed in levels of demand for courses at lower-tariff universities across the UK; however, this has conversely driven a significant rise in demand at higher-tariff institutions. The result has been a general shift in focus and funding for the provision of new purpose-built student accommodation investment opportunities.
According to Jon Wakefield, group director for strategy and communications at UPP, universities have recognised the need to provide high-quality accommodation and facilities, to give themselves a competitive advantage in the market, and this can only bode well for investors.
He stated.”It is vital to the continued success of the UK higher education sector that universities meet the expectations of students, by ensuring the very best experiences are available to all.
“Knight Frank’s latest research signals a UK higher education market that is set for a continued strong performance in 2018.”
Aligning the long-term need for more student housing across the country with a growing need for focused investment in core areas of high demand is therefore essential for the sector.
According to Knight Frank’s recent Development Pipeline 2018-19 report, this is something that institutions, developers and investors are all now coming together to achieve.
Student accommodation investment market
Investors in the student property sector are faced with a growing array of options, with Knight Frank predicting upwards of 23,000 new purpose-built student bedrooms will come to the market in the 2018-19 academic year.
Across the UK, Knight Frank has pinpointed several key locations where demand is highest, with the body classifying the cities of Liverpool and Newcastle among its ‘mature market’ segment at present – a group of locations with a longstanding and an expected long-term need for wider student-specific housing options.
Elsewhere, Manchester, Edinburgh and Birmingham remain a set of ‘core markets’ that will see long-term growth in demand in the coming years, while emerging markets in the near future could include Cardiff, Canterbury and Bath.
Tim Mitchell, head of global real estate at GSA, commented: “We see continuing demand for [purpose-built student accommodation], driven by affordability, but also student and university preferences. In this regard, it is interesting to note the current trend in development towards shared accommodation.”
Student accommodation investment opportunities
Indeed, it is a trend that Experience Invest has been quick to recognise, with options for our investors including the ongoing support of developments in Newcastle, Liverpool and Cardiff, among others. Aura Student Liverpool and Opto Student Newcastle are two standout development options at present, each offering an assured NET rental return of eight per cent for their first five years.
As we’ve seen, it is a burgeoning market for purpose-built student accommodation across the UK right now and investors wishing to secure strong and lasting returns should pay heed to the highly positive sentiment surrounding student housing investments.
Student accommodation report 2018
If you would like more information about entering a high yielding student housing investments, click here to access your Student Accommodation Report 2018.