2017 is in full swing and, at least for the next few weeks, we should expect hopeful and upbeat forecasts across the markets. After all, 2016 would be hard to beat for the sheer crazy highs and lows in economic terms. Following the referendum result, Sterling fell off a cliff, the FTSE panicked, and people predicted that the housing market would go down while commercial property performance at one point looked to be on life support before recovering and getting back to business as usual.
Thankfully for those of us in the student property market, things stayed quite stable and predictable. That’s not taking in to account the ill-thought out process for dealing with the anxieties of international and European students, of course. With the government promising to trigger article 50 in March it would be in everybody’s interest if the government could make this announcement sooner rather than later.
Some cities facing saturation point
A report quoted in the Financial Times has reported that some cities are facing ‘saturation point’ for purpose built student accommodation. With student housing expected to have had its biggest ever year in 2016, the popularity of student accommodation investment has clearly grown spectacularly in recent times. However, this has brought its own problems as forecasts show that proposed student visa changes, law changes and Brexit could mean falling student numbers over the next decade.
Investors are advised to be cautious with their investments as there have been a number of new providers and developers to the market looking to offer ever-cheaper investments to potential student landlords without perhaps fully stating the risks. As students increase their ability to seek out the best value for money in comparison to the facilities offered, there is rarely long term value to be sought in cost-cutting measures by developers.
What may be considered to be ‘chic’ living now for cheaper than the market rate will quickly become out of date and irrelevant in a very technology driven student industry. Projects which take in to consideration long term requirements and implications will be the best investments in the five to ten year medium term.
Further to this, location remains a key consideration. City centre living will always be popular but there can often be value sought in up-and-coming areas. The struggle, as always, is finding out which areas are legitimate investment areas and which are nothing but a flash in the pan.
For instance, those projects in ideal long term locations are Manchester city centre districts, while those which are up-and-coming in the long term are universities which are seeing their popularity and reputation rise, such as Bolton.
Despite this, there are some campuses and universities which are still decrying a lack of appropriate accommodation for students which provide the correct facilities for modern students.
Modern students now require fast, affordable broadband as well as appropriate communal study areas that offer peace and quiet. Most of the older properties owned by the universities themselves are run down and lacking in competent facilities.
The message for student landlords for 2017 is this: the market is set to grow again this year, but those with a long term plan should invest carefully and keep up to date with new student developments in order to fully take advantage of a very profitable asset class.