Considering investing in student property? Here’s what you should know

By Bridging Loan Directory 11th April 2019

A beacon for higher education students, the UK is home to some of the world’s leading universities. Consistently topping league tables, the country boasts five of the top 20 universities in the world, according to the 2019 QS World University Rankings.

With the UK’s student population growing year-on-year, the prospect for property investment in the form of student accommodation has been increasing in popularity. After all, domestic and international students alike are in need of suitable housing when they move to a new city to complete their studies.

Student accommodation – both Purpose Built Student Accommodation (PBSA) and private rented accommodation – has established itself as a popular asset class, and one that many domestic and international property investors are keenly considering.

Before embarking on an investment, however, there are various factors that people need to keep in mind to ensure they make the most of this thriving sector.

Key trends in the market

The first step is to note any developments that are taking place in the market. For any keen investor interested in this sector, the rise of the PBSA is one such trend that should be on their radar.

According to Cushman & Wakefield’s latest UK Student Accommodation Report, there are now 627,000 purpose-build bed spaces for the 2018/2019 calendar year. And the enormous size and value of this market cannot be ignored – the UK’s PBSA sector is projected to reach a total value of £53 billion by the end of 2019.

Naturally, the Brexit question poses some concerns; will the UK continue to attract international students from Europe in years to come? Will there be same level of demand for PBSA post-Brexit and there is now? Taking into account current statistics, many of these questions can be put to rest – after all, EU students make up less than a third (140,000) of the total population (460,000) of international students in the UK. And with student visas already available specifically for residents of non-EEA relocating to the UK for their studies, there’s no reason why similar schemes would not be employed for European students. This of course depends on how Brexit will pan out over the coming months.

Meanwhile, the UK’s reputation as a global leader in higher education is sure to continue attracting investment into the accommodation housing these students. Experience Invest recently commissioned an independent survey of more than 500 UK-based property investors to uncover investor sentiments towards different property asset classes; almost one in four (24%) said they were considering investment into student property in 2019.

The importance of location

The success of PBSA schemes is largely dependent on location, as well as the quality of the build and the amenities offered.

Starting with the basics, however, location is one of the most important features to get right. Cities boasting two or more well-regarded universities are promising investment hotspots, as they typically have a large student population and must cater to year-round demand for housing.

Examples of these include Liverpool and Newcastle – cities where investors can find opportunities like Aura Student Liverpool and Opto Student Newcastle. Strong demand for accommodation in popular student cities means that there is a constant need for quality housing located a short distance from university grounds.

The specifics of the development become important here, particularly due to the busy nature of a student’s lifestyle. Students will be on the lookout for accommodation that is close to bars, restaurants and cafes, and which is easily accessible by public transport.

The need for amenities

The majority of students in the UK study away from their home regions – 1.1 million students in total, according to the aforementioned Cushman & Wakefield report. Not only has this figure risen over the past decades (it’s 61% higher than in 1999), but the demands of students have also changed.

Today, there are key criteria by which students will evaluate a potential property. These include fast, reliable Wi-Fi, and amenities such as gyms. The quality of the accommodation is naturally also a top priority, a factor cited by 67% of respondents during a study by UCAS and Knight Frank. Other important considerations are whether the property offers the ability to live with others (cited by 76%) and, naturally, the most important factor is location (79%).

This survey reveals just how important all of these factors are, and how students today are looking beyond simply finding accommodation in a convenient location.

Considering the high (and growing) number of people in the UK seeking higher education degrees, and with the majority moving away from their home towns to do so, demand for quality accommodation in prime locations is extremely high. With the diverse variety of options on offer, taking into consideration the location and characteristics of PBSA is vital in deciding how to best take advantage of this market.

Jerald Solis, Business Development and Acquisitions Director, Experience Invest

Jerald Solis, pictured above, is the Business Development and Acquisitions Director at Experience Invest, a company that provides property investors in the UK and overseas access to exclusive investments across a variety of asset classes. He is also a Director at Opto Property Group; a construction firm committed to creating developments that have a long-term, positive impact.