Upmarket student property is now a highly sought-after property investment, with investors clamouring to be able to get involved.
During the MIPIM property conference in Cannes – the industry’s leading event – investors were educated about upmarket student property, which is seeing rising demand, largely due to high numbers of foreign students at British universities.
Student residence has become an attractive option for property investors, since it doesn’t come with the sorts of issues that can often dissuade investors, such as tax hikes and increased regulation. There is also less anxiety about the UK’s exit from the EU, as there will always be a need for student accommodation.
High demand for upmarket student property
Research by Savills has revealed that institutional investors have spent more than £4.3 billion on more than 50,000 UK student rooms in just the last year. Many analysts think this year will see a similar number of transactions.
Student accommodation is seen by many as a resilient market, as it withstood the financial crisis, while other forms of property investment did not. This means that it will have lasting appeal. And the more upmarket the accommodation, the higher the yields for owners.
Cities like London, Manchester, Liverpool and Birmingham have huge numbers of students, giving investors a wide range of opportunities to obtain an asset with the potential to perform exceptionally well.
Home away from home
Wouter Onclin, co-founder of student housing think tank Class of 2020, told the Guardian that many students come from wealthy families located abroad, who want to “be sure their children are going to be living in a professionally-managed place” during their studies.
These properties have facilities like gyms, swimming pools and cafes, and can charge weekly rents of up to £650 in London, far higher than the average rent both in the city and outside of it. Many of them have kitchens in each room, which only serves to increase the appeal and yield value.
The fall in the pound’s value is only expected to further increase foreign interest in studying in the UK in the coming academic year, with more foreign investors also predicted to enter the market for the same reason.
It means that investors interested in purchasing upmarket student property should think about doing so in the short term rather than delaying.