The UK’s student accommodation market has been shown to deliver lucrative returns to investors, and there are signs it will continue to appeal, despite the ongoing political and economic uncertainty caused by Brexit.
Specialist real estate services firm JLL has highlighted how student housing is attracting a lot of demand from overseas buyers, who clearly feel confident this asset class will continue to perform well in the years to come.
Asian investors commit to student accommodation
In an article for JLL’s The Investor, Philip Hillman, the firm’s head of alternatives in the UK, noted that Asian buyers are driving the trend of international investment in the student accommodation market.
“There has been significant interest and activity from Asia,” he commented. “UK student housing is rightly regarded by Asian investors as a defensive asset class.”
There have been a number of specific examples of major investment in this sector from countries in the Asia-Pacific region, with Singapore Press Holdings, Centurion and Mapletree all taking high-value stakes in student accommodation, along with Singaporean sovereign wealth fund GIC.
One of the key factors that makes this asset class so appealing to buyers is the steady flow of demand from renters. The UK’s higher education institutions are a powerful draw for students based in Britain and further afield.
While applications from EU students to UK universities have dropped slightly over the last two years, non-EU student numbers have risen by 11 per cent.
Applicant numbers from China, for example, increased by 11 per cent between 2017 and 2018, while the Indian student population in the UK grew by 36 per cent in the same period.
Mr Hillman pointed out that investors will see a diverse spread of student nationalities as a sign of a healthy market.
“When a typical student housing scheme has as many as 50 nationalities in it, that’s also a great diversifier,” he said. “For investors, rental income coming from such a spread around the globe means very little risk if one particular nationality faces an economic downturn back home.”
While there are undoubtedly still questions about how the UK’s economic and political landscape will look after the country leaves the EU, there are excellent prospects for the student accommodation sector to attract more investment and continue growing.
Mr Hillman commented: “International students and international investors seems like the perfect match. We will undoubtedly see more of both.”
Buyers looking for current opportunities in the market have a range of projects to choose from.
Developments such as Opto Student Newcastle and Aura Student Liverpool, for example, promise healthy returns in two cities that are home to a number of popular universities.
Furthermore, Experience Invest recently opened a new office in Hong Kong, meaning we are ideally placed to support and engage with Asian investors considering a move into the UK market.