Overview: With student property already in short supply, the lifting of restrictions on student numbers looks set to see demand for accommodation skyrocket.
60,000 New Student Rooms Needed
Lifting The Cap On Student Places Leaves Accommodation In Short Supply
Back in autumn 2013, George Osborne announced that the cap on student numbers would be lifted as of 2014/2015. With the first set of applicants since the cap was lifted in their lecture halls, what does the easing of restrictions mean for the property market in and around the UK’s universities?
The Increase Has Already Begun
UCAS, the application service provider, announced back in August that the number of students accepted into higher education stood at 409,000 this year. This is an increase of 3 per cent on last year’s figures, and the trend looks set to continue despite lingering concerns over tuition fees.
When questioned, around half of the UKs universities claimed that they would be actively recruiting students over the next five years, with some looking to increase numbers by as much as 50 per cent. Some of these universities are already planning ahead. Building work is underway and campuses are being extended to make room for the increase in student numbers.
However, there is one area that seems to have been overlooked by many – accommodation.
Student Property Is Already In Short Supply
Student property has been a hot topic for some time now amongst investors in the know. High yields and good fill rates made purpose built student property one of the best investments out there after the financial crisis hit in 2007/2008. As ever, the reason behind why this form of investment was working so well comes down to the simplest of market drivers – supply and demand.
Quality student accommodation is hard to come by in many parts of the UK, and with the lifting of the cap on numbers of students that universities can take in, it seems unlikely to change any time soon. It is estimated that as many as 60,000 new student rooms will need to be created in order to satisfy the demand that is expected to materialise over the first five years of the cap being lifted.
In short, the demand for student accommodation has never been higher than it is now. To say that supply is limited would be an understatement, but very little appears to be happening to address the situation as universities simply concentrate on swelling their numbers by advertising heavily both at home and overseas.
What Does It Mean For Investors?
While the lack of supply may prove to be a source of worry and angst for students hunting down somewhere to live while they study, for investors, things are altogether different. Student investment property is a very attractive proposition indeed and the government’s lifting of the cap should only increase the demand further.
Investment opportunities abound in this sector of the housing market. What was once the sole preserve of investment houses and fund managers is now available to individuals too. Purpose built student accommodation developments offer private investors the opportunity to get involved in an already proven investment model, one that is offering above average yields without the hassle of becoming a direct landlord.
With student numbers rising and universities proactively seeking to maintain growth, investment in student accommodation looks to be a sound bet for the foreseeable future.
Article Courtesy of: Jonathan Stephens, Surrenden Property Investment