Has designer student accommodation been outsmarted?

Arthur takes a look at the upward trend of investment in smaller, multiple bedroom flats (HMO’s) in contrast to luxury student designer studio flats.  These smaller sized HMO’s have higher return on investment and are popular amongst student’s due to their lower rental cost.

Analysts say there is increasing appetite for affordable housing and less interest in the luxury smart pads.  North America and Asia have led the charge in investing in the £43 billion sector, as a struggling Britain looks to foreign investment to help improve its infrastructure. ”About 99% of investors are focussing their investment towards affordable accommodation” said James Hanmer, head of Savills’ student housing investment team.  Six/ ten- bedroom flats consisting of smaller bedrooms have proved a win-win solution, being cheaper for students as well as generating higher turnover for property owners.

Price Comparison

Designer studio and shared flats are the two most popular forms of student living.  Research based in East London, a student hub, showed that a mid-range studio can cost around £2,000 a month.  However, a room in a shared flat can go for around £1,000 a month.  Unsurprisingly, the bedroom is likely to be half the size and you are having to share the communal areas with up to 8 people.

Positive News

The unstable political environment and the uncertainty surrounding Brexit could have reduced the number of high spending foreign investors coming into the U.K.  However, John Pullan head of student property at Knight Frank said overseas investors have seen the profitability in student accommodation and want to get involved, he claimed ”More than 70% of investment is coming from overseas buyers, from sovereign wealth funds and ultra high net worth individuals and private equity.”

With cost a top priority for students, lower prices are a key driving force for accommodation providers and with room sizes reducing, this will help price variability and reduces prices for students.  During a period where students feel victimised, this cannot come too soon.  Protests carried out by students last year against expensive rents for student accommodation shows the need to lower rent, especially with the cost of attending university and the ever increasing debt awaiting at the end.

As the student accommodation sector twists and turns, Arthur will continue to keep an eye on it and inform you. Don’t forget to follow us on social media for all the latest property news !