Student landlords can achieve net yields of up to eight per cent in some university cities for postgraduate accommodation. As the UK attracts more and more overseas students doing MAs and PhDs, buy-to-let accommodation tailored to this market is in high demand, Investment specialist Assetz explained in the International Business Times. This makes postgraduate housing a very attractive asset class and those looking for real estate opportunities are increasingly setting their sights on the British student market.
De Montfort University in Leicester and Glasgow University are just two institutions that offer high yields for landlords of postgraduate accommodation, the news provider reported. However, most university cities and towns offer plenty of attractive deals for investors looking for high returns. With the postgraduate population in Britain increasing by 13.4 per cent between 2007 and 2012, despite difficult funding conditions, it is not hard to see why demand is so high.
There is also a lack of bespoke postgraduate accommodation, Assetz explained to the International Business Times. Stuart Law, chief executive officer of the firm, said: "Undergraduate student hall of residence accommodation has long been a sound buy-to-let investment opportunity, offering excellent yields, but the lucrative market in high quality postgraduate accommodation is only just starting to materialise."
"Many students are continuing to study after their undergraduate degree due to the current competition in the UK jobs market and overseas students are drawn to the UK for its excellent standard of university education," he added to the news provider.
Because of the reputation of British educational establishments, it's no surprise that the sector is attracting international investors, including those from the US. Indeed, New York-based Avenue Capital purchased the Opal Property Group portfolio, including approximately 1,800 bed spaced. The accommodation is located throughout the UK at some of the country's major university cities, such as Sheffield, which has 992 beds. There are also 648 beds in Nottingham.
The acquisition of Opal Group was the first step in Avenue Capital's long-term plan to invest in the UK student accommodation sector. Richard Furst, senior portfolio manager at the Avenue Europe Strategy and chief information officer of Avenue Capital Group, explained that the properties will act as a foundation for further activity.
Learn more about the different options when investing into student accommodation here
- Tuesday 07 January 2014