Student property investment in the UK’s has soared in 2013, as investors seek to tap into one of the market’s most lucrative asset classes, new figures from CBRE suggest.
According to its Student Accommodation Index, the sector has shown total returns of 9.95 per cent in the 12 months to September 2013, which is higher than total returns on offices, industrial and retail property over the same period.
The report suggests that government support for higher education in 2013 has buoyed investors’ confidence – something that has made education the UK’s fifth largest services export sector, ahead of both insurance and computer services.
Some of the measures attributed to raising investor confidence include the reform of visa processes, the statement of no intention to cap numbers of international students, and the relaxation of penalties for universities that over-recruit students.
This has sent a “clear signal” that the student accommodation sector is being primed for further growth, said Jo Winchester, head of student housing advisory at CBRE.
She explained: “International students spent over £10 billion on tuition and living expenses in 2011/12. We expect the number of international students in the UK will grow by 15 to 20 per cent over the next five years, as the demand for English-taught degrees continues to lure students from across the globe.”
The result of this popularity will be “reliably high” occupancy rates in student residences and stable income streams, which will make the sector an attractive prospect for small and large investors alike, Ms Winchester predicted.
According to the index, rental values for student accommodation in regional towns have increased by an average 3.5 per cent in 2012/13, which suggests healthy growth across the entire country.
This is set to be maintained as international investment streams into the country, with buyers from the US and Australia in particular making significant investments in recent months and set to bolster this spending into 2014 and beyond.