Developers and investors who are keen to enter the student accommodation market may want to turn their attention towards renovating unused buildings for the purpose. Marketing director at FreshStart Living Stephanie Sowerby explained that such properties present an excellent opportunity for investment, due to the shortage of space for new buildings in city centre locations. She added that it is often straightforward to obtain planning permission for such developments, which may appeal to investors who are keen to see a quick return on their capital.
Ms Sowerby commented: "Disused buildings can be obtained very cheaply and transforming them into student accommodation is very easy and cost effective." She pointed out that many universities are keen to provide more housing for scholars, but funding is often not available to the institutions at present. "In many cases, due to cuts in government funding, universities have even resorted to selling off their halls of residence to raise money. This gives developers the rare opportunity to get involved in the student market," she stated.
One educational establishment that appears to be taking this approach is the University of Lincoln. Earlier this month, the Lincolnshire Echo reported that the institution had applied for planning permission to demolish a derelict building next to a disused factory it has acquired. The newspaper revealed that the university is considering converting the former industrial site into student flats as part of wider plans to expand the campus over the next decade.
However, research published recently by Knight Frank indicated that property investors are also struggling to source funding in some instances. The firm asserted: "Restrictions on the availability of debt finance will continue to shape the property market for the foreseeable future." This may make it more difficult for schemes in the student accommodation market to find financial backers with available cash.
Investors also need to think carefully about the location of any developments they want to get involved in, with Savills stressing that while prime student housing will perform well over the coming years, assets in less-favourable locations will not generate such high returns. In its Spotlight on Student Housing report, the organisation highlighted the need to look beyond student numbers at the overall academic performance of an institution, as well as localised market prospects, before making an investment.
- Monday 21 November 2011