February 17th, 2017
In recent years, the student property investment market has been absolutely booming. As universities’ own stocks of accommodation have been dwindling and falling into a state of disrepair, many have been willing to take up the challenge and provide students with boutique, high quality housing. That willingness has paid off too, with profits for many increasing year-on-year as student numbers continue to grow and universities look at ways to increase their intake.
It has largely been a mutually beneficial partnership for many universities and developers, as the ability to provide students with quality accommodation undoubtedly improves the student experience on offer.
Until now there have been a large number of smaller developers who have taken town and city centre developments and refurbished them in order to house a fairly small number of students. The arrangement has worked well as investors are able to snap up an apartment at a relatively low price for a high return. Furthermore, student tenancy rates tend to be high and stable when located in desirable areas.
On this basis, it was only a matter of time before the big players began to take notice as performances in the sector continue to overshadow more traditional residential property investments.
For instance, there has been news recently of an acquisition by Unite Students in Birmingham that will be the biggest of its kind ever to hit the market. As reported in the Telegraph, the block, called Aston Student Village, will serve Aston University with more than 3,000 bedrooms and is the first on-campus accommodation Unite Students will own. The developer has traditionally concentrated on building its own blocks near the UK’s top universities, rather than on campuses themselves.
It was also reported in the Telegraph that Unite partnered with Singapore’s sovereign wealth fund GIC to make the purchase, which was sold by Aston University and Lloyds bank. Aston Student Village is currently the only student halls on offer to students at Aston University, which has a student population of 11,000 and is in the centre of Birmingham. The acquisition of the property takes the number of beds Unite has in Birmingham to more than 5,000. In total, the company provides a home for more than 50,000 students in 140 properties across England and Scotland.
It is a move which signals large scale investment and interest from the bigger players in the property development market, and points towards a strong and stable future for student property. Smaller investors and ‘student pod’ owners have already been making a tidy profit in the market for nearly a decade and it was a matter of time before larger developers began to recognise the opportunities on offer.
Those already invested in student property should see this as positive and a sign that the market is set to continue its upwards trajectory over the short and medium term. Larger developers rarely make mistakes in these areas, and now could be the time for student property investors to start adding to their portfolios.
Student numbers are expected to hold steady, and with many universities now investing money into facilities across their campuses rather than into accommodation, such as the University of Salford, there will be real and tangible opportunities for those with their finger on the pulse.
If you are looking to invest in student property, we have a wide range of fantastic apartments in rental hotspots across the country which are available now and will provide immediate income to the investor!