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Student accommodation

Student property investment surges in 2 years

Author: Gemma

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The past two years have seen a quick rise in the volume of investment in student property, according to the latest report released by Savills.

In the Spotlight on Student Property, it said that in 2012 and 2013, there was £5 billion worth of standing stock and development sites sold in the UK for the purposes of student property, and that looking forward, the signs are that 2014 will be similarly strong.

To the end of April this year, there was already investment to the tune of some £950 million in the student sector in the UK, which accounted for around 17,000 new beds in the sector.

By the end of the year, it is expected that this total will reach some £2.5 billion. The report also indicated that now may be the perfect time for people to get themselves onto the student property ladder.

This is because Savills expects to see an uptick in the number of students accessing courses over the next year – one in four of whom will live in rented accommodation.

It said that there was a drop in application numbers in the 2012-13 academic year, largely brought about by the government’s introduction of the £9,000 tuition fees, which left many contemplating larger debts if they want to go to university.

However, after this 7.4 per cent fall, Savills said this year will see applicant numbers start to rise again, particularly near the top performing universities, with people looking to get more for their money.

Overall, there was a 3.6 per cent increase in student applications in the academic year 2013-14, and Savills said this will rise again this year, with early indications for September entry showing a rise of 3.4 per cent in the number of people applying to institutions.

If this proves to be the case, then it will mean a return to peak levels of 700,000 applicants, a figure which was last reached in 2011-12, before tuition fee increases were introduced.

It will mean a better chance of returns for investors in student properties, with Savills predicting that returns will grow throughout the rest of this year to finish at 13.7 per cent, far ahead of the 10.6 per cent predicted in the mainstream residential lettings sector.

Savills also looked into how the student housing market can help to ease the housing crisis in the UK, and found that with alterations, there are some 77,000 homes across the UK that could be unlocked to the mainstream market to provide much needed family homes.

Finally, the company has also updated its analysis of the future prospects of towns and cities around the country, which looks at how suitable they are for more development of purpose built student housing.

In this ranking, 2014 sees Aberdeen, Bournemouth, Glasgow, Kingston-upon-Thames and Newcastle join the nine cities already ranked in the ‘first’ bracket – which shows highest potential.

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