Whilst there were concerns that Brexit would have a negative impact on the Purpose-Built Student Accommodation (PBSA) market in the UK, new research has quashed this theory, with Savills reporting that over £2.1bn was transacted in the student housing sector after Brexit, compared to £1.9bn earlier in 2017. The same report noted a 17% increase in investment in student accommodation in the UK year on year.
This illustrates a growing popularity in investment in PBSA, with investors recognising that the asset class can often offer higher returns than traditional buy-to-let.
The numbers of overseas students in particular flocking to UK universities to take advantage of the world-class education on offer is monumental, and only on the rise. Research from Universities UK International showed that 91% of international higher education students across all levels were satisfied with their university experience in the UK – so it is no surprise that the UK has seen a rise of 2.2% in applications from overseas students outside of the EU.
A rise in the number of university students has resulted in the demand for PBSA far outstripping supply, equating to there being 3.5 students for every available room last year. Industry experts have noted that this demand is particularly high in certain cities, including Liverpool which last year saw a 20% increase in students from the previous year. With an estimated 60% of these students requiring accommodation, the need for more PBSA speaks for itself.
High demand has made PBSA an excellent venture for property investors, with it becoming apparent that the need for high-quality student rental accommodation is a necessity. As well as this, there has been a growth in rents, in turn improving rental yields in the sector. Commercial property and real estate consultant Cushman & Wakefield is anticipating average headline rental growth of 2.9% between 2016/17 and 2017/18 within PBSA, demonstrating buoyancy in the market.
Research from Knight Frank has shown that the average weekly rent of a room in a student accommodation block is £126 – a figure that illustrates the growing trend within the student sector for students paying a premium in order to secure a luxury room.
PBSA often offer students more than a traditional university hall would, with many blocks fitted with extra amenities such as gyms, private kitchens, en-suites and communal games rooms. International students in particular are snapping up these boutique rooms as an alternative to more traditional student lets.
The upsurge in demand for student property in the UK means that investment in PBSA offers an excellent way to diversify your portfolio, with high yields and low entry prices. If you’re interested in finding out more about how you can invest in student property, contact StudentPodshop.com today and speak to one of our experienced student investment consultants.