Student accommodation investment isn’t the first thing that people would think about when looking to add some diversification to their current investment portfolios.
However if purchased in the right location they can give fantastic returns on an annual basis, with the added benefit of the asset increasing in value as time goes by.
One important thing to look out for is which cities have the most student population, the higher this is the better the chance the accommodation will be let and remain that way. Rising student numbers in the UK has increased demand for student property in all major university towns and cities across the country.
Some of the highest population of students include Glasgow, London, Bristol, Birmingham & Manchester.
Given that recently students are moving away from multi occupancy homes (HMO) to city centre, purpose built student accommodation, with students willing to pay that extra premium to have the best possible accommodation for their time at University, it gives much more strength to the demand and helps overall returns on investments.
Despite the rising tuition fees more and more people are choosing to go to university rather than straight into work. With a record high number of students applying for university in 2015- this is great news for anyone thinking of investing in student accommodation and this high demand is vital to the success of any investment. Rental growth averaged 3.65% in 2015 as student numbers continued to grow way faster than the supply of accommodation.
Student accommodation investments were one of the strongest performing asset classes in the UK, even through the recession, students still went to university to study and therefore the sector continued to perform.
It is also widely know that student accommodation outperforms many other buy to let investments, with many investors enjoying between 8-10% per year in comparison to around 5% in traditional buy to lets. Another added benefit to having students let is that they tend to stay in the properties for a number of years. As long as they are kept happy. This means that you are no longer worrying every 6 months that the person renting may wish to leave as they tend to be studying for at least 2 years.
In the coming years we will see a further increase in the demand for purpose built student accommodation, as student numbers continue to grow and a tendency for these students to choose PBSA.
London is a great example of how they are falling short for the demands for PBSA. With its student population growing at fast rates, and despite the increase in rooms being created, the under supply of PBSA will only drop to 70% (1% decrease).
The largest percentage of full time students unable to access a PBSA remains in Glasgow where 78% of students are failing in finding a suitable venue of accommodation. Other major cities Birmingham 65% and Manchester 64%, showing the need country wide for more investment in the construction of PBSA.
Moving forward in 2017 we continue to expect Capital PBSA investment returns to outperform the traditional sector. Making this type of investment a sound one for anyone looking at adding or diversifying portfolios.
Harley student accommodation have a number of opportunities across the country currently for this type of investment, contact them today for more information on Student Accommodation Investment.