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Student property investment used to be the niche asset class in the UK’s property market, but ever since 2012, when student numbers started to grow in the post tuition fee era for the first time, we’ve seen the market move into the mainstream at an incredibly fast pace.
For the first time the market hit £2 billion of investment in 2012. This figure was matched in 2013 and 2014. In 2015, the demand from students for high quality accommodation has increased the level of spending, with £4.25billion invested in the first 9 months of this year alone, over double what it’s ever been before.
The experts at Savills said that UK student property investment exceeded
£5.7 billion for 2015 however, what will the future hold for 2016?
Looking back over 2015, the sector has shown no real sign of slowing down, with investor appetite having been fuelled by a number of positive factors surrounding the UK’s higher education sector.
Student numbers continue to rise and this is expected to be the case throughout 2016. Looking back to the sharp drop recorded when tuition fees were increased; UCAS has posted impressive growth in applicant numbers almost on a yearly basis.
Mid-July will provide the student property market with the first indication of student numbers for the next academic year when the final deadline passes. However, looking back to October, when applicants numbers were up 1%, it would seem that student numbers could well and truly be on the up again next year.
Rising student numbers will give investors more confidence that demand for purpose-built will remain high, which will only increase the appetite for investment.
The UK’s buy-to-let market is also popular with investors, as this stock is what people want in a fast-paced modern world. However; student property is the most lucrative market, as investors typically make net yields 4% to 5% higher than residential buy-to-let property.
Another point to consider is the continuous rise of international students in the UK, which is likely to boost investment this year. For years, cheap HMOs (Houses of Multiple Occupancy, or traditional student 'digs') were the choice of investors, but the tide has turned as increasing numbers of international students come to the UK, often with money to spend and a desire to find better quality housing.
Ultimately, only time will tell if 2016 will be as successful as this year, however all the signs point it being another good year for student property investments…
Remember to give us a call on 01582 228299 if you’d like a chat with us about your student property investment options and how we can help you to get the ball rolling.
The Team at Go Global Investments
"Having never purchased a student investment property we were a little curious as to how it worked, the risks involved and total costs involved....
"I looked at 5-6 student accommodation schemes, spoke to all of them.....
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