The past two years have seen a rapid increase in the level of investment in UK student properties. According to recent data, this trend shows no sign of ending.

A report commissioned by Pinnacle MC Global Network, which was titled Spotlight on UK Student Housing, has concluded that 2014 is likely to see a continuation of "high levels of investment activity." The report also revealed that the first four months of 2014 had seen around £950 million worth of transactions, totalling 17,000 student beds. The report went on to highlight the fact that "This is above the level seen in the same period of 2013, it is well above previous years including 2012. With a further £1.4bn worth of investments on the market we can expect to see activity in the region of £2.5bn by the year-end."

The report also highlighted the volume of standing student property and sites sold for development in the UK as an indicator of a thriving market. Currently, the combined value of such sites totals around £5 billion.

Rising student numbers also help to buoy the market, attracting investors through growth in demand. A few years ago, the well-publicised tuition fee increase led to concerns that student numbers would be permanently dented. However, student numbers are now definitely on the up. UCAS application for 2013/2014 were up 3.6%, and early returns of 2014/2015 applications have increased by 3.4% compared to this time last year. By March 2017, Russell Group universities plan to spend £9 billion on construction projects, including accommodation for students alongside other new facilities.

All-in-all, the report suggests that the UK's student property investment market presents developers with a "significant opportunity." Across the country, there is the potential for an extra 290,000 beds targeting student tenants. The report analysed stock of student housing throughout the country, and found that much of the current stock is inadequate. In the cities of Edinburgh, Liverpool, Newcastle, Manchester and Bristol, more than half of student beds are in out-of-date, poor-quality halls of residence. Two thirds of these are managed by the universities themselves, and frequently lack adequate security, maintenance and facilities.

In particular, Pinnacle MC Global Network points to the potential for construction of purpose-built student accommodation complexes to replace the more traditional option of houses in multiple occupation (HMOs). This, Pinnacle believes, could release 66,000 properties into the general housing stock of England and Wales to help ease the current housing crisis.

According to Pinnacle MC Global Network's director, Julie Harvey: " We calculate the majority of lower quality blocks are in good locations and so could be renovated to a higher standard. However, 16% of all beds are in lower quality blocks in poor locations... For operators looking to expand, the opportunity to take market share from these lower quality and poorly located blocks will be attractive."