Investors are ploughing cash into student housing in Britain as they see mouth-watering returns of around 10% that are way ahead of most other investments.
Individuals and institutions have sunk over £1.6 billion into student housing in the first nine months of 2013, according to property consultants CBRE.
The average annual yield of 9.95% is higher than investment returns than commercial property, like offices, retail and industrial premises.
The report highlights continued government backing for education has buoyed investor confidence.
In his autumn budget statement, Chancellor George Osborne heralded more good news for student housing by indicating 30,000 extra university places will be available in the next academic year – and after that any caps on university places will be lifted.
CBRE’s Jo Winchester explained that this is a clear signal for extra growth in the student housing sector.
“International students spent over £10 billion on tuition and living expenses in 2011 /12. We expect the number of international students in the UK will grow by 15% – 20 % over the next five years, as the demand for English-taught degrees continues to lure students from across the globe,” she said.
“The result of this popularity is reliably high occupancy rates in student residences and stable income streams, making the sector an attractive prospect for small and large investors alike. Rental values for student accommodation in regional towns have increased by an average 3.5|% in 2012/13, showing healthy growth across the UK.”
“The UK’s student accommodation sector is taking the interest of a wide variety of investors. US multi-family and student housing operator Greystar recently purchased a portfolio previously operated by Opal worth £310 million.
“Australian student housing operator Campus Living is understood to be preferred bidder on a portfolio of 4,539 beds previously run by Opal. 2013 has also seen the launch of the first dedicated student housing REIT, GCP Student Living, on the London Stock Exchange, offering smaller investors a new route into the sector.”