The student accommodation sector’s journey on its unprecedented boom is not about to end soon, according to property research specialists Knight Frank who have predicted that the market will continue to produce positive results.

The research specialists have predicted UK investment over the next 12 months to produce a colossal return of 9.2%. A simple mismatch between supply and demand in an extremely under-supplied market has stimulated this rise and led to an increase of 0.4% on London returns to 9.1%, and forecast rises of 3% in London and 2.75% in the regions from September 2013.

The UK continues to attract students from around the globe because of its illustrious reputation as one of the world leader’s within the sector and the quality and prestige associated with a British education – five of the world’s top thirty ranked universities are situated in the UK.  Over 19.2% of the student population are represented by overseas students who have a tendency to look towards private student accommodation which has contributed to the prolonging boom of this housing sector.

The admission cap removal is set to boost the numbers of student applications in the UK as it increases the amount of students who can be accepted in to prestigious Russell Group universities; this is bound to lead to an unparalleled boost in applicants, which will only help the market thrive even more.

Knight Frank Property Index

In 2012, universities and colleges were given the opportunity to recruit as many students who achieved A-Levels of at least AAB as they wished, after the government removed a cap which prior to this limited the numbers of students universities could take on-board.

These controls are set to be relaxed further in time for the recruitment process of 2013, giving Universities the chance to recruit an unlimited number of students who have received at least the lower grades of ABB.

This change in policy allows top-class Russell Group Universities to use the admissions cap removal, to escalate their student numbers over the coming years, by accepting rising numbers of bright students.

The improved chances of attending these prestigious universities is set to boost student applications in the UK, as more and more students aim to seize the opportunity to study at some of the world’s best universities. UCAS have already reported that they saw a 3.5 per cent year-on-year growth of applications for university for the 2013/14 academic year.

The Higher Education Funding Council for England (HEFCE) has also confirmed that over four billion pounds is also set to be allocated to higher education between 2013/14.

These government policies have helped dispel fears that student applications would drop following the rise in tuition fees and has helped boost the numbers of those seeking private student property in years to come, prolonging the student property boom in the process.

2012 proved to be a ground-breaking year for the student property market, delivering total returns of 9.6% which out-stripped every other property market, with offices returning 4.4% and retail returning 2.2%. Investment in the sector also soared by 125% – reaching a staggering £2.7 billion.

These plans are set to bolster 2013’s student property market and ensure that the market continues to flourish.

The recent governmental changes in regards to the amount that universities in the UK can charge annually for their courses, was initially predicted to have a negative impact on student applications.  Yet in reality, the figures reported by the Universities and Colleges Admissions Service (UCAS) for the 2012/2013 academic year (the first year in which the tuition fee rise of £9,000 came into effect) only show a 7.4% drop, something which universities are keen to highlight as an indication of the strength of British Institutions.

As reported recently in The Guardian[i], numerous institutions have in fact noticed an increase in the number of applications, including the University of West London (up 8%), Keele University (up 2% in core subjects) and the University of St. Andrews, who has recorded an impressive rise of 17%.

“…our comprehensive support and bursary package … make sure we can still attract the brightest kids, regardless of circumstance”, says Julie Ramsey, Director of Admissions.  “The new UCAS stats mean we’re looking at an average of 10 applications for every place”.

Even with the decline, the number of places available at higher education institutions still currently outweighs the amount of applications received.  Figures collated in March 2012 show that there are already 80,000 applications ahead of the number of acceptances in 2011, indicating that the demand for Higher Education in the UK is by no means waning and consequently, demand for student accommodation is on the increase.

By Samantha Jones

Consistently out-performing traditional investments in the commercial property sector throughout 2011, student accommodation is proving that it is still the leading asset class when it comes to lucrative rental yields for investors.

The continuing shortage of purpose-built student accommodation throughout the UK is driving developers to diversify their portfolios into this profitable market, through a combination of refurbishment projects and new-build developments.

Where to Invest!

London: According to research conducted by property experts Knight Frank, the largest area of undersupply is London, where there is an acute need for student accommodation at an average price point of £150 to £200 per week.  As property developers responded promptly to this need by providing the market with a variety of projects to invest in, the increase in average rental prices in the capital rose by 9% in September 2011, allowing for higher than expected returns in existing developments.  However, investors are advised to be cautious as, although rents are rising, land prices are much higher than in the regions, producing lower yields on the property as a whole.

Regional Cities: With student numbers reaching as high as 200,000 in Leeds and 57,000 in Liverpool, demand for high-quality accommodation in regional cities is particularly robust, particularly when considering the rise in post-graduate units at the individual establishments.  It is in the regional towns that specialist companies like Knight Knox International are leading the way in regards to providing bespoke, sophisticated developments which offer students hotel-style amenities at affordable rental prices.

This regional outlook is echoed by James Pullen, Head of Student Property at Knight Frank who says “Outside London …investment in towns which have more than one university with a high density of students can be the most lucrative”.

Demand in the regions is particularly healthy, with average returns holding at 6.5%; higher than those in the capital.

By Samantha Jones

As UK residential property prices continue to drop, investors are advised to turn their attention to a buoyant student accommodation market, as an assured way to expand and diversify their portfolio.

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Manchester based property investment firm, Knight Knox International, has revealed that their latest student accommodation project is firmly on its way to being fully reserved, only three short weeks after coming onto the market.

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