Of the various segments and sectors making up the UK property market, student accommodation has distinguished itself as a promising and potentially lucrative option for investors in recent years.
Factors such as strong tenant demand and a healthy supply of new developments have opened up many opportunities in this space, and new research suggests the positive trends are set to continue this year.
A strong pipeline
Approximately 29,000 purpose-built student bedrooms are due to be delivered across the UK by the start of the 2019/20 academic year, according to the latest development update from Knight Frank. That marks an increase of 25 per cent from 23,000 in 2018/19.
This upturn in construction activity is set to bring the total number of dedicated student bed spaces to 600,000, a rise of 5.1 per cent. Furthermore, an additional 14,000 bedrooms are currently under construction or in planning for delivery in the 2020 and 2021 academic years, with potential for that number to go up as new applications are approved.
The research highlighted the increasingly significant role the private sector is playing in the student housing market, with 82 per cent of bedrooms due to be completed by 2021 coming from private developers.
James Pullan, global head of student property at Knight Frank, said the “significantly larger” pipeline this year shows that confidence in purpose-built student accommodation “remains undiminished”.
“Affordability will remain a key focus for owners, operators and students, and our analysis shows a shift in development towards shared accommodation in response,” he added. “Schemes that provide clear and obvious elements that add value will attract the strongest demand.”
Knight Frank analysed development data across more than 60 university towns and cities, highlighting some significant trends in key locations for the student property sector.
Liverpool and Newcastle – where investors can currently find opportunities such as Aura Student Liverpool and Opto Student Newcastle – were classed as mature markets, or “strategic cities containing dual or multiple well-regarded universities, and large numbers of students”.
The study also highlighted transition markets such as Cardiff, where affordability remains the main driver of rental growth.
It’s clear that investors have a lot of options to choose from in the student accommodation segment, with every location and property type offering its own incentives and potential benefits.
To find out more about current opportunities and prospects in this market, contact Experience Invest.