With more students going to university and college each year and an estimated 2.4 million students in the UK, and a huge shortage of accommodation, there is a huge opportunity to make large, passive income from investing in high quality student accommodation located in cities with prestigious universities.
With more students going to university and college each year and an estimated 2.4 million students in the UK, and a huge shortage of accommodation, there is a huge opportunity to make large, passive income from investing in high quality student accommodation located in cities with prestigious universities.
Currently there is insufficient supply of student accommodation, with only 23% of demand for beds being met by university maintained properties.
Existing accommodation universities have is often outdated and largely not fit for purpose. Private operators are now working with universities to purchase and develop their existing stock, or build new.
In 1996/97 there were 1.8 million students which is expected to increase to over 2.4 million following a surge in applicants for 2011 degree places.
Knight Frank has reported, through their own independent research, that only 50% of all students in the UK have access to high quality purpose-built student accommodation.
The expansion in student numbers in recent years has led to a far greater demand for accommodation pushing up prices and in turn rental yields.
There is intense competition among universities to attract students and the availability of prime quality modern accommodation is a critical part of their marketing plan.
Now is a perfect time to take advantage of current investment conditions.
Student Halls are an asset class that rarely become available to individual investors with universities tending to purchase units before they are offered to market and landlords not needing to sell due to the high yields.
Student accommodation is being seen as the single largest untapped real estate market in Western Europe.
Is this the right time to invest in student accommodation?
According to research by Knight Frank, rentals in this area remain robust with a recorded growth of 5% per annum over the last six years. (compared to 0.6% for commercial property).
Substantially higher growth was achieved in university towns over the past academic year.
Demand for university places rises during recessions and the proportion of students that are returning postgraduates has risen to 24%.
Preliminary figures for the coming academic year already show a significant increase in applications with UCAS reporting a 12% rise at its October deadline.
Students pay rent in advance, and rents increase year on year – and with a management company in place this offers low hassle and high returns!
How do I know what the value is of the student accommodation on offer?
As an asset class and no longer a niche property market, the sector is maturing and becoming recognised as an important element of the wider property investment market.
Valuers and lenders alike recognise this and will put a value on this, just as they will with other investments
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