With the high and rising costs of attending university, we are already seeing emerging trends of students looking for flexible ways to enjoy studying and university living without breaking the bank. Many students are choosing to attend local universities, to enable them to continue to live at home and not to have to worry about paying rent. Others are opting to study part time in order to continue to work and fund their studies. Read the rest of this entry »
Several weeks ago, we argued that the student accommodation market has matured considerably as an asset class and is increasingly attracting interest from institutions active in the wider property investment market. This week, there is further intelligence to support this argument, with international property investment consultancy Property Frontiers reporting strong returns and growing interest in student accommodation investment.
The investment consultancy believes that given this strong surge in interest, the sector is set to become one of the most popular forms of property investment in the UK over the next five years and will play a signicant role in the recovery of the property market post-downturn.
The current student bed shortage, particularly in the capital, as previously discussed, ensures that yields tend to be higher than in the wider residential sector, with Property Frontiers reporting yields of almost 10% based on tenant agreements already in place for the year ahead.
Student accommodation can record excellent returns – if managed astutely, to ensure the highest rents and occupancy. For example, since taking over the management of properties in Lincoln and Sheffield, South Street has improved the average occupancy from around 85% to over 99.8%, helping to ensure consistently strong asset performance year on year.
Further, strong projected rental growth offers more good news for the sector. Savills’ latest market report published last month forecasted rental growth of 5.5% in London for 2010/2011 and 5% across the UK.
Strong yields, based on healthy projected rental growth and the fact that demand greatly outstrips supply means that student accommodation as an asset class is underpinned by solid fundamentals and favourable sector trends.
