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accommodation universities have is often outdated and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%. |