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

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.

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

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

With the deluge of changes over the past two years in the way that universities in the UK are allowed to run, investors could be forgiven for thinking that the student accommodation market was an unfamiliar investment. However, recently published reports on this sector have highlighted how, instead of a decline in student numbers, universities are experiencing an overwhelming amount of applications, something that their existing facilities cannot cater for.

The global mobility trend for Higher Education has been steadily rising for a number of years, with non-domiciled students accounting for more than a sixth of the UK student population. Although the rise in tuition fees has caused outrage amongst home-grown students, universities have traditionally charged non-EU students higher fees, so compared to worldwide university fees, the UK remains competitive.

The Hub, Student Accommodation, Sheffield

Additionally, the work restrictions put in place for entering the country on a student visa by the UK Border Agency last year means that only the most affluent of students will be able to afford to study here. The UK is currently ranked third in the world for the price of tuition fees for overseas students, highlighting the need for universities to package their courses and institutions more attractively.

The private sector currently accounts for approximately 40% of all UK student housing needs, as universities increasingly find that they cannot keep up with the demand for affordable accommodation. Recently published research by residential property experts Knight Frank indicates that approximately £500m will be generated by universities over the next five years, due to the disposal of their existing halls of residence to the private sector.

The UK student accommodation market accounted for more than £740m worth of capital in 2011, according to research by commercial property advisor CBRE, fuelled, in part, to the growth in rental prices and high occupancy levels in regional cities.

Historically, the student accommodation market in the UK has always been a solid investment for institutions, with pension funds the driving force behind the majority of ventures. Over the past couple of years however, the market has shifted towards a more commercial offering and specialist companies like Knight Knox International have penetrated the market by re-packaging and selling individual units, which are more attractive to private investors.

Attracted by this lucrative investment opportunity (average rental yields are 6-6.5%), both domestic and overseas buyers alike are focussing on building stylish, affordable accommodation for a more consumer-focused student.

After recent successful ventures in Birmingham and Liverpool in the provision of bespoke, boutique student accommodation, Knight Knox International is making major strides in the UK student buy-to-let market, with at least three major developments underway. St Ann’s Lodge in Headingley, Leeds and Nelson Square in Bolton are both major refurbishment projects that have drawn major investment from buyers. Attracted by assured 10% rental yields that are currently outperforming virtually all national property investments, and the knowledge that a specialist student management company will handle all queries, both projects currently have high occupancy rates, which shows why student accommodation is one of the strongest performing asset classes in the country.

The Hub, Knight Knox’s own development project in Sheffield, is a new-build construction set over seven floors. Comprised of 71 bedrooms, The Hub is the first self-funded development by Knight Knox International and will be ready for the first intake of students in Q4 2012.

For further information on our range of UK buy-to-let student properties contact Knight Knox International on +44 (0)161 772 1370 or visit www.knightknox.com

By Samantha Jones

Knight Knox have been advising investors for some time now about the lucrative deals to be made in the student accommodation sector, and their latest project, St. Ann’s Lodge, is certainly exceeding all expectations.

St. Ann's Lodge, Headingley, Leeds

Ideally located in the leafy suburb of Headingley, St. Ann’s Lodge is a turn-of-the century building which is currently undergoing major refurbishment to convert it into stylish student accommodation units. Built over four floors, with disabled access at ground level, all rooms are tastefully furnished to an exceptional standard and include free WiFi. Conveniently situated within walking distance of Leeds Metropolitan University and all local amenities, the development has garnered a tremendous amount of interest from investors wanting to take advantage of the lucrative yields (currently assured at 10%) and high occupancy rates. With prices for a 1-bed student pod starting at £29,500 and due for completion in time for the 2012/2013 student intake, the speed at which this development is selling is an indicator of the amount of confidence that property investors have in this sector.

The popularity of student accommodation investments has been highlighted in the media with increasing frequency of late, particularly in light of recently published statistics from commercial property advisers CBRE, who estimate that over £750m of capital was invested into the sector in 2011, an increase of almost double the £350m invested in 2009.

The amount of money being poured into the sector confirms the current buoyancy of the market, at a time when UK universities are finding it increasingly difficult to provide adequate levels of accommodation for the volume of students they are accepting onto courses. In addition to the increase in fees introduced by the government in 2011, recent changes to the Tier 4 student visa by the UK Border Agency (UKBA) has meant that only the wealthiest of foreign students will be accepted onto degree courses. Whilst this may have initially been viewed as an obstacle, recent thinking by property experts Knight Frank, in their recently published 2012 Student Property Report, is that students will now begin to view their university experience as a commercial venture, forcing universities to re-evaluate their provision and differentiate themselves in a saturated market.

This shift towards a more commercial offering for student residences is something that property experts like Knight Knox have been anticipating, demonstrated by the tremendous success of their latest offering in Leeds.

Knight Knox are delighted with the speed at which the development is selling, commenting that “this is an extremely encouraging start to the year, allowing us to be confident of the decisions we are making in regards to the provision of bespoke, boutique student accommodation to the market place.”

“The student accommodation sector is currently one of our hottest markets and our experienced team of sales advisers are on-hand to advise investors on the best way to expand their portfolios into this lucrative area.”

Following successful developments in major cities including Birmingham and Liverpool, St. Ann’s Lodge is on its way to becoming Knight Knox’s 10th sold-out student accommodation project, firmly establishing the company as a market leader in this niche sector. Further projects in the midst of completion include those located in the popular university towns of Bolton and Sheffield.

For more information on student accommodation investments, please contact Knight Knox International on +44 (0)161 772 1370 or visit www.knightknox.com.

By Samantha Jones