School’s Not All Bad
Property investors have committed nearly £348 million to the student accommodation sector in the UK since the beginning of 2011, new research has revealed.
The resilient sector provides a guaranteed long term income stream and is generating attractive yields of between 5.25% and 7.00% depending on location and the leasing agreement.
University towns and cities have traditionally attracted the most interest from developers and investors but with student numbers increasing by 4% last year alone, a substantial student accommodation shortfall exists across the country. For example in Brighton and Hove there are five full time students for every bed space, in Dundee there are seven and in Glasgow, nine.
Impending fee increases of up to £9,000 per annum are not anticipated to dampen demand, but instead place a marked emphasis on value for money and improved quality. Student accommodation will subsequently have an important role to play in the overall university experience and this could result in upward pressure on rents.
The historic double digit rental growth that the sector has enjoyed over the last decade may now be more muted but the market is expected to stay strong.
