Student property could be one of the most lucrative real estate investment opportunities available at present, with the sector continuing to exhibit strong rental growth, largely due to an imbalance in supply and demand. This is the opinion of Marcus Roberts, director of student investment and development at Savills, who explained vacancy rates in this type of accommodation around the country are low, because there aren't enough beds to meet demand.
"Rental growth is still very much there - probably between three and five per cent on average across the UK. As an investor, you are looking at the fundamentals [of] the supply-demand imbalance and the rental growth as being key to the success of the sector over the last ten years," he asserted. Meanwhile, private companies are increasingly taking on student accommodation from universities, as the educational establishments look to generate money they can put back into the academic facilities. Mr Roberts added the quality of the student housing available is important, as institutions seek to attract a growing number of scholars from overseas as well as domestically.
Loxley McKenzie, managing director of Colordarcy, recently drew attention to the potential returns available to investors in the student accommodation sector, stating: "The student property market is renowned for outperforming the wider rental market." The organisation went on to highlight the West Midlands and Yorkshire as two of the most attractive regions in the UK due to the high number of universities in these areas. However, investors may be keen to look at the London market, after Knight Frank revealed returns on student accommodation in the capital doubled year-on-year in September 2011.
According to the data published by the firm earlier this year, investors were making 15.1 per cent on their real estate assets in this sector, compared to 8.4 per cent in the same month in 2010. Head of student property at the firm James Pullan was confident the upward trend in this market would continue throughout 2012. "Limited supply coupled with rising global interest in the UK's educational excellence points towards further strong rental growth in the sector," he said.
- Wednesday 28 March 2012