Student housing landlords can expect higher rents as demand for beds increases in the coming months, according to the latest corporate research.
London student housing rents are forecast to increase by 3%, while those outside the capital lag a little but still grow by 2.75%, says property consultancy Knight Frank.
The figures come from the firm’s latest annual report into the corporate student housing market.
The rising rents are likely to be boosted by an increasing number of full-time students and an undersupply of beds in student halls.
The study also points out that more investors from outside the UK are looking at pumping money into the sector, especially from the US and Middle East.
Other findings include:
- Rent differentials between purpose-built student accommodation are up to 75% higher than for shared student housing in Oxford and Newcastle, and 56% higher than houses in multiple occupation (HMOs) in London
- London rents rose 1.73% year-on year for the 2013/14 academic year, while regional rent increases averaged 1.59%
- Studio rents are increasing slightly quicker than rents for en-suite flats. Students pay an average weekly rent of £299 for studios
- Average gross yields to September 2013 were 7.8%, while student housing outperformed all other commercial property investments
The report suggests providers can add value through design, refurbishment and branding.
“This element of the sector has until now been overlooked, and student housing brands have a low level of recognition among students,” said James Pullan, Knight Frank Head of Student Property.
“By increasing awareness of their brands, providers can target specific market segments and achieve higher returns. We also expect some consolidation of operators in the management sector in 2014.
“Confidence in the sector is evident, and demonstrated in a simple way by the schemes currently taking shape around us. There has been a trend for increasingly tall developments, some as many as 35 storeys.”