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University applications and student property investment opportunities are trending together
UCAS, the University Clearing and Admission Service, reported a 6.6% increase in university acceptances in January 2013. The latest statistics for 2014 reveal that there has been a 4% increase in applications, so there is likely to be a further increase in acceptances - once again good news for student property investors.
UK education is also renowned globally for its high quality and internationally competitive fees, leading to a continual rise in applications from foreign students - helped significantly by current UK government policy - a significant proportion of which prefer to live in specialised accommodation. University acceptances from non-UK nationals rose 5.8% in 2013, and are up 18% since 2008
With a relatively low percentage of students being able to be housed in university accommodation, specially designed developments are fast becoming very popular with both investors and students, and there is plenty of evidence suggesting the existing investment trend will continue for some time yet.
Director of Savills, Yolande Barnes, says “The past two years have seen student property investment in the UK soar. According to analysis recently issued by the firm, 2012 and 2013 saw total sales of £5 billion in development sites and standing stock.
2014 could be a year of similarly high activity, according to some of the signs so far. In the first four months, according to the most recent data, transactions covering over 17,000 student beds were made with a total value of around £950 million. This shows a year-on-year increase compared to the same four months of 2013, and is also above the same period in 2012. Taking into account the fact that investments currently on the market are worth a further £1.4 billion, Savills predicts that 2014 will ultimately see around £2.5 billion worth of transactions.
The attractiveness of the student housing sector to investors "means that this trend is not likely to falter in the near future”. However, she also notes that "investors will have to bear in mind some of the risks”, such as a ‘flight to quality’ where the universities with the best reputations continually attract the most applicants, and a demographic dip in the number of potential domestic students up to 2020, which grows again thereafter.
Specialist student property typically offers better returns than standard buy-to-let property – net yields (often assured) are 7-9%, compared to the national average gross yields of 6.3% and properties are managed by experienced management companies to maximise your investment and minimise risk of default.
Student accommodation has changed dramatically over the past few years as landlords have seen increasing demands on quality, location and safety for students. Purpose built residences reassure both students and parents that they are able to study and live in a more home-away-from-home environment, and helps to alleviate any anxiety they may be experiencing. It is vitally important for students’ mental and physical wellbeing to be considered at this time, and their housing can play a pivotal role in allowing them to thoroughly absorb this new chapter of their lives, and maximise their learning potential.
Along with the emotional benefits there are also economic and social benefits to purpose built student accommodation. Purpose built projects are being encouraged by councils, as they free up private properties currently tenanted by students (known as Houses in Multiple Occupation or HMO’s), which should help balance the accommodation needs for local families and students. New regulations issued by most city councils require that HMO Landlords own permits, the cost of which is passed on to the tenant – making purpose built student accommodation even more attractive for students
UK student accommodation has outperformed all other types of UK property investment over the past few years, and the ever growing demand looks like it will exceed supply for some years yet, so now is the ideal time to take advantage.
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