Investment in buy-to-let student property has grown during 2015 and is predicted to continue a path of high investment
The UK’s student housing market remains a high growth industry, with investment reaching £3.98 billion in the first half of 2015. In comparison, the investment levels for student housing in 2014 was £2.35 billion.
Real Estate services firm CBRE states that these figures are high due to the common perception by investors that sees student accommodation as a higher yielding form of property than the average buy-to-let rental. Average student property yields are now believed to be around 4.75%.
With increasing amounts of students going to university across the UK, much of the purpose built student accommodation has struggled to meet demand. According to one advisor, demand will outstrip supply for some time, and as such student housing will remain an enticing venture for any potential investors.
So why is student property more resilient to market changes?
One study has even shown that student housing appears more resistant to rises in interest rates. Student housing has shown years of proven stability, more so than any other type of property. It remains the only property industry which saw consecutive increased annual returns, even during the recession years – evidence which cannot be overlooked.
The student market is also more accessible to investors with less cash than the average residential properties. Student properties tend to be cheaper than other residential properties as they can be finished to a lower standard and still receive high levels of demand. As a consequence, some investors do not have to worry about borrowing finance in order to purchase student property. Instead, they can be self-funded, especially in some of the less expensive student cities outside of London.
Lastly, many universities are set to uncap enrolment number in September. This will only intensify the amount of student demand. University cities are continuing to see a growth in premium purpose built student accommodation. As a result, investors can remain confident that there will continue to be a demand for student properties.