There are many opportunities for investors looking to enter the student accommodation market, with smaller schemes aimed at people in their second or third years, as well as housing in twin university cities, among the top options. This is according to director of student investment and development at Savills Marcus Roberts, who stressed investors need to judge each scheme on its merits.
He highlighted Glasgow, Edinburgh, Newcastle, London, Manchester and Liverpool as the obvious targets, because these cities have more than one higher education institute each and therefore "you get a double hit of fulltime students". According to the Knight Frank Student Property 2012 report published earlier this year, London, Kingston, Brighton, Edinburgh and Durham had the highest number of fulltime scholars in the 2010-11 academic year. Returns on this type of real estate asset in London stood at 15.1 per cent in September 2011, while for the regions this figure reached 10.5 per cent. Head of student property at Knight Frank James Pullan commented this sector "has outperformed every other commercial property class".
Meanwhile, Mr Roberts explained that, in locations where the student accommodation market is considered to be "mature and saturated", there are often real estate investment opportunities on a smaller scale. He suggested a development of 50 to 150 beds near a main campus could be a good choice. Such a scheme "would work very well because of the proximity to the campus and the type of accommodation that you could provide", he asserted, adding: "You would be aiming at the second and third-year market, taking them out of the houses in multiple occupation market into a better quality service."
Investors new to the student accommodation industry have several options when it comes to how to gain a foothold in the sector, Mr Roberts noted. Those who want to be directly involved with the management of their assets can purchase a terraced house or a block of properties, while a "more passive investor" is likely to prefer investing in a student fund.
- Friday 11 May 2012