Student property market enjoys high investment levels
The student property market has enjoyed a number of good years in terms of investment, which have turned it from a niche asset in the property market into one of the most profitable and popular with buyers.
From the first time investment levels topped £3 billion in 2012, to last year when the market nearly doubled this intake from buyers, it has been a period where the market has only gone from strength to strength. View UK student property infographic…
And even though this year was never going to top the fantastic investment levels that we saw in 2015, when investors spent some £5.7 billion on student property, new data shows that it has been yet another strong year for the sector, and that once again investment levels have topped that £3 billion marker that for so long seemed out of touch for student housing.
According to the latest data released by Cushman & Wakefield for 2016, the student property sector has seen investment of some £3.1 billion over the course of the past 12 months, which not only marks the fifth consecutive year of investment levels over £3 billion, but also represents the second fastest year in history for the sector, in second place only to 2015.
2016 student property market
The data shows that over the course of 2016, there have been some 62 transactions taking place in the British student property market, with an average price per bed space coming in at a little over £73,000.
On top of this, a fantastic new trend has seen investment in student property this year growing markedly in the regions, where Cushman & Wakefield said the majority of buyers have been looking, as London becomes less of a focal point for the sector.
Places like Leeds, Liverpool, Manchester and Birmingham have seen swelling numbers of students over the last few years, which has meant increasing demand for homes for students in the private sector. This has meant that time and again, investors have been able to see value in buying where the demand is on the rise.
The company said that it is this demand, fuelled by a 0.4 per cent annual rise in student numbers nationwide, that has helped all investors see the value of student property.
Mike Mitchell, partner in Cushman & Wakefield’s student residential investment team, said: “The growth in student numbers, including those from overseas, continues at pace,” adding that the competition between universities has helped to drive demand further through quality, which has added a greater need for student homes.
Purpose built properties
The report also looked into the fact that purpose built student homes are becoming more of a key interest for the market at present. When compared with last year, Cushman & Wakefield said there has been a rise of some 5.4 per cent in the number of student homes being built specifically with this market in mind.
This takes the number of purpose built student homes currently in place in the market to more than half a million for the first time, with total rooms now topping 568,000 nationwide.
And throughout 2017, this is likely to be just one area of a strong student property market that continues to grow and becomes even more prominent, according to the report, which expects rising rents as demand keeps climbing.
Mr Mitchell said: “With over £1bn of potential investments currently queued for sale, 2017 will undoubtedly be another strong year for transactions. There are several overseas investors with unfulfilled requirements circling the market.
“This will undoubtedly act as a catalyst for further sales and consolidation into 2017 – especially as real estate investors increasingly turn to alternative assets such as student accommodation in search of returns unavailable elsewhere.”