A report published recently by investment specialists Assetz has revealed the UK's hotspots for student property investment and some other interesting data regarding the increasingly popular investment sector.
According to the report, the 5 leading towns and cities for investment in student accommodation are Glasgow, Leicester, Southampton, York and Liverpool as they all benefit from large student populations and high demand. Like many parts of the UK, the current level of supply is not sufficient to properly cater for the number of students who need housing.
Investment in this sector has risen in popularity with the number of investors putting money into buy-to-let housing for students growing by 13.4% since 2007, according to the report.
The report highlights a shortage of postgraduate accommodation and housing suitable for overseas students. Overseas students now account for over 50% of those in postgraduate study in the UK and many international students prefer to have their 'own space' rather than shared housing.
Dedicated Student Housing Most Popular Investment
According to Assetz, the demand for individual units of accommodation is met by dedicated student housing which provides blocks of separate student flats in prime locations close to university campuses and other amenities such as shops and nightlife.
Often, these developments resemble student halls of residence but offer a higher standard of living and have proven popular particularly with international students, both postgraduate and undergraduate. Apart from preferring the privacy that comes from individual hotel-style flats, this market is often prepared to pay extra for the excellent locations and premium living standards on offer.
With the government making efforts to attract more students from overseas and the undersupply issue in this market there are some very exciting opportunities for investors to get involved, driving further growth in the sector.
These 'custom-built' developments tend to offer more affordable outlays than the more traditional route of multiple occupancy housing, as purchasing a self-contained individual student flat within a wider development is significantly cheaper than buying a large, multi-bedroomed house for shared occupancy.
Strong Returns and Capital Growth
Nevertheless, Assetz said that returns in this market are usually strong – often around 7% and potentially higher – and are frequently guaranteed over an initial period. Driven by the security of the market and the excellent opportunities on offer, investment in student property continues to grow with hotspots such as Glasgow and Leicester leading the way.
Investments in student accommodation fall under the category of 'Income Generating Assets' (IGA) as they provide annual returns together with capital growth. Assets typically require no ongoing involvement from a management perspective as they are managed by professional and experienced management companies.
The UK IGA market provides opportunities to invest in thriving markets which demonstrate the potential to outpace the UK's conventional property market. All IGA investments have underlying assets such as student accommodation, hotels and serviced apartments.
Cash positive from the start, you can see your investment perform immediately as most IGA opportunities provide assured regular payments over a pre-defined period of time, typically generating a minimum 7% net yield. As units are often purchased at discounted rates, capital growth can be an attractive benefit dependent upon ongoing market conditions.
- Wednesday 25 June 2014