Britain’s student real estate investment ‘booming’
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Students property investment has significant increased in the past 12 months thanks to a weak post-Brexit pound and the high occupancy levels offered by many of the UK’s university towns.
According to a recent analysis conducted by Savills, investment in student property is set to reach £5.3 billion by the end of the year, marking a 17 per cent increase compared to 2016.
While some property markets have been suffering as a result of Brexit, Savills results found that interest in student property only increased following Britain’s decision to leave the European Union. Specifically, the analysis saw a total of £2.1 billion transacted following the referendum, compared to £1.9 billion before the vote.
Currently, this increased interest in student property investment means demand is outweighing supply. According to Savills, 25 per cent of the £4.5 billion traded by the firm in the past 12 months required forward funding developments, while five per cent were development sites. Only 69 per cent of property sales was made up of current real estate stock, which was reportedly the lowest proportion ever recorded.
The analysis was supported by Mistoria Group, which has also seen a rise in student investment from both within and outside of the UK. However, according to managing director of the organisation Mish Liyanage, there has been a significant increase in interest from international investors.
“They are attracted to the UK because of the relatively low-cost student property on offer and the excellent net yields that range between 12% and 15% in the North West,” Liyanage said. “Investors have a wide choice of accommodation to chose from, such as HMOs to purpose-built accommodation.”
Liverpool is currently considered the greatest university city for investment, according to the Mistoria Group. Their data shows that investment properties have delivered average gross rental yields of 13 per cent, with return on investment averaging 35 per cent. “The gross rent on the property will exceed £1,235 pcm, as each room is rented out,” Liyanage added.