With yields shrinking and value becoming harder to find, there seems to be a light leading investors towards the student property market in search of a more worthwhile investment. There are 160 universities in the UK with approximately 2.5 million students, 700 higher education colleges and currently an estimated 170,000 new foreign students coming to the UK every year and they need somewhere to live. Sounds like a no brainer!
According to Savills £4.2 billion has been invested in student accommodation in the first 5 months of 2015. As the market has grown, so too has our understanding of it; it appears the key factor to success is location. Close proximity of the accommodation to University campuses and purpose built, modern digs are a recipe for success – student tastes have changed and they expect more than poorly converted, low quality houses with tiny bedrooms and dribbling showers (not to mention the annoying neighbors who complain every Monday, Wednesday, Thursday and Friday when you have a party). According to Knight Frank students are willing to pay a premium of 20-70% to stay in well located, modern units.
Many investors also take the view student accommodation is fairly low risk because many residents return and there is refreshed, almost guaranteed demand year on year; not to mention most rent and deposits are paid by parents further reducing the risk profile. Further reports done by Savills show the annual rental growth is often higher than RPI in the UK leading to higher yields. Andrew Ingram a surveyor at Morgan Pryce believes, “the only concern investors should really have is that the number of people going to University in the UK (and from outside the UK) will continue at current levels.”
This news was brought to you by Morgan Pryce, a specialist tenant acquisition agent with offices in Oxford Circus and the City. Morgan Pryce specialises in search, negotiation and project management and works exclusively for tenants.
