Student Property Investment- an overview

Student Housing December 20th, 2017
Student Property Investment- an overview

As we are reaching the end of 2017, Arthur takes a look into why  student accommodation is such an attractive investment proposal.

Student property has proved to be a very profitable asset giving great returns which is why we have seen growth in investment.  Jaccqui Daly, of Savills Research stated ” We expect investment volumes to reach £5.3bn in 2017 as investor confidence returns after the EU referendum.  This is a 17% increase on 2016.”

Increased number of overseas students and good returns on buy-to-let are some of the reasons behind the surge in investment.

Unite are one of the biggest players in the market who are upgrading on a large scale, they have planned to spend more than £300m creating around 7,500 student rooms within the next 3 years as it partners with some of the top UK universities.

There has been a constant rise in PBSA over the last few years, even overtaking the U.S as the largest student accommodation market in 2015.  The UK has seen a surge in foreign investment from Singapore with a £1.2 billion investment in PBSA in 2016.  There has been a dramatic increase in foreign investment where overseas money accounted for 35% in 2014 to 64% in 2016.

James Pullan, Head of Student Property at Knight Frank said ”There are more investors in the sector now than there ever have been.  It is one of the few systems in the property world that has delivered consistent real growth every year since the economic downturns. ”

Reasons for why the U.K is an attractive investment location now and why it’s predicted to attract more investment in 2018 is due to the following reasons.

  • The UK is a globally renowned university system, coming second in the world according to the HESS rankings.
  • Increasing student numbers.  These have increased by 30% in the last 10 years, with consecutive growth within the last 4 years.  Removing the cap on student intake, means there is now no limit on student numbers which was an incentive to increase student numbers.
  • Buy-to-let becoming buy-to-lose. Low yields ( 4-6% gross )  has lead to more incidences of landlords selling their buy-to-let and purchasing student accommodation.  For instance there are no estate agents fee’s, stamp duty land tax, mortgage fees and the list goes on.
  • Economies of scale drives costs down- the large scale nature of student accommodation enables lower unit costs.  The costs of construction, management, maintenance & repairs, onsite facilities etc. are divided between multiple units.
  • The PSBA sector is the highest yielding property sector.

If this article has persuaded you to think about investing in student housing, why not go ahead in 2018?! And check out our student housing property management software while you’re at it!

Keep a look out for Arthur’s blogs for all the latest property news!

 

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