May 18th, 2016
It’s been a good few years recently for student accommodation; investment and quality are on the rise whilst rents have stayed fairly stable. In the not too distant past many students experiences were epitomised by living in large dilapidated buildings with 8 others to an apartment. Shared bathroom and kitchen with a box room at extortionate prices anybody?
Things have gradually improved and students are starting to see big projects going up in their cities with increasing frequency. Boutique student living is big business after all. Students for that matter are absolutely huge business. Students are worth a staggering £80 billion per year to the UK economy in what they invest in their education, as well as the skills they develop to eventually contribute to the workforce.
In terms of what students mean to the UK economy, here are some surprising stats for you:
So with students making such a vast contribution to the UK economy it’s no surprise that student living conditions have been the focus of many private investors over recent times. Key student city Manchester, which has the largest student population in Europe, has seen an explosion in boutique living spaces for students in the last five years and perhaps it’s no surprise given the large market to compete for. There are other smaller cities that are also seeing great benefit from these private investors though, with Salford, Liverpool, Leeds and Nottingham also seeing a boom in the industry.
Key developments to look out for are Rathmell Hall in York, Maid Marian House in Nottingham and Avalon Court, also in Nottingham. Cities across the UK are inviting companies to provide their campuses with improvements as student caps have been lifted and competition for students escalates.
The attraction for investors is clear, with prices for student accommodation investments sometimes half the price of residential apartments in city centres, meaning a lower risk factor and an ability to spread investments over a more diverse portfolio. Once the accommodation has been bought and built tenancy rates are often excellent, with student management companies rarely struggling for alumni willing to pay extra for the VIP treatment. Another advantage to student investment is that yields are often strong as rents grow along with the reputation of the institutions they serve. Manchester, Liverpool, Leeds, Nottingham and York all boast excellent universities in the middle of clusters and their reputations grow ever stronger over time.
Student numbers are increasing despite funding cuts as more and more young people seek an advantage in the job market. The Chancellor has also announced the removal of caps to student places, meaning universities can accept more students than ever before. All this leads to shortages in appropriate accommodation for a student community with the money to pay for quality. No matter what the future holds we can be certain that students will continue to study, they require quality accommodation and they’re willing to pay for it, which spells good news for investors. With prices low and growth high there’s never been a better time to invest in student property.