Student accommodation investment in the UK has smashed another record. According to the latest data from CBRE investors poured £2 billion into student housing investments during the first 9 months of this year, an increase of 145% over the same period in 2011. According to the firm's head of student advisory Jo Winchester, investors are being drawn the strong returns of university accommodation developments.
"Our data shows that student accommodation is outperforming other asset classes by some margin, as it has brought 9.6 per cent returns in the year to September 2012. This compares to 5.4 per cent for all offices and 2.2 per cent for retail in the year to August 2012," she said.
The report also contains details of several transactions worth over 100 million GBP. This is the first time transactions in the student sector have gone over this threshold. Arguably more importantly the report speaks to a growing trend in the sector whereby investors are actively looking to invest outside of London. According to its findings, more than half of the funds ploughed into student accommodation so far this year have been for assets outside the capital city.
This isn't the first time this year that CBRE has brought record-breaking news from the student investment sector, indeed each report this year has shown investment volumes creating new ceilings. Looking at the fundamentals it is easy to see why. The cold-hard figures show that demand for student accommodation outweighs supply by around 3 to 1 depending on where you look. Indeed, because student accommodation investment has come into its own recently, the sector will be better supplied than it has been for decades.
Martin Copeland, sales director for Knight Knox said last month that investment demand is still strong in the sector, with "more commercially aware" students demanding better accommodation, and investment providers stepping up to serve this need as well as the demand for investments in the sector.
- Friday 02 November 2012