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Student accommodation investment in Leicester: A property investor’s guide

Leicester student accommodation property investment and buying guide
Feb 5, 2015

This guide outlines to potential investors the opportunities that exist in the student property sector in Leicester; those looking for high-yield student accommodation investments in the UK.

In it, you will discover the economic drivers behind Leicester’s growth as a key city and a seat of student learning, and find out why Leicester is attracting a larger number of students than many other cities – including those from overseas. Read our full guide to find out the ins-and-outs of student accommodation investments in Leicester.

Contents

Click on any of the above links to jump to a specific category or scroll down to browse through the entire guide:

 

An overview of Leicester

Critically undersupplied student housing sector

Leicester is one of the UK’s most popular, cosmopolitan and exciting cities. It is packed with things to see and do and is rich in history and heritage dating back over 2000 years. It is a city of surprises where old meets new in perfect harmony. It boasts some stunning new venues, such as the National Space Centre and the Curve Theatre, sitting comfortably alongside important historic sites, like the Jewry Wall (harking back to the days when the city was under Roman rule) and Leicester Cathedral.

Leicester is rich in the arts; it boasts many highly renowned museums, including the New Walk Museum and the Jewry Wall Museum, as well as the Richard III Exhibition in the Guildhall, which was established following the sensational discovery of the King’s skeletal remains beneath a car park in the city.

Leicester also has a proud sporting heritage and its sporting links are very much at the forefront today. The city is home to Leicester City Football Club, Leicester Tigers Rugby Club and Leicestershire County Cricket Club, as well as the Leicester Lions Speedway and the Leicester Riders basketball team, while Leicester Racecourse is in nearby Oadby.

Leicester is the powerhouse of the East Midlands economy. It has a strong engineering sector and also offers world class shopping courtesy of the Haymarket and Highcross shopping malls.

The city also boats two universities – the University of Leicester and the De Montfort University – the latter of the two being of specific interest to student property investors on the back of a recent announcement about the £136 million De Montfort University Campus regeneration program that is sure to put Leicester under the investment spotlight.

The economy of Leicester

Leicester: economic powerhouse of the Midlands

The city of Leicester is the main driving force of the economy in the East Midlands. With the transfer of the Eurostar Terminal to London’s St Pancras railway station, the city now enjoys more direct transport links into continental Europe.  East Midlands Airport is on the doorstep, as are the M1 and M6 motorways with their road links to the rest of the UK.

Leicester and Leicestershire are home to many world-class enterprises, including the likes of 3M, Caterpillar, DHL, Next, Santander, Triumph, Walkers and Wal-Mart.

Historically, Leicester had strong associations with the textile industry and these links are now being re-forged as many large High Street stores, such as John Lewis, Marks and Spencer and the Arcadia Group (owners of Dorothy Perkins, Miss Selfridge and Top Shop), are refocusing on sourcing woollen products locally. As well as quality issues and health and safety concerns, lead times from countries outside the UK, like the Far East for example, can be a long as 18 weeks, whereas lead times here in the UK, offered by textile manufacturers in Leicester, can be as short as just 3 to 4 weeks.

 

What makes Leicester a good property investment location?

55,000+ students studying in Leicester

Leicester and Leicestershire are attracting more and more investors for reasons that include:

  • The largest economy in the East Midlands worth approximately £19 billion
  • An active workforce of over 1 million people within a 45 minute radius of Leicester
  • 55,000+ students studying at Leicestershire’s three leading universities
  • Leicester was recently voted as one of the UK’s top cities in which to transact business
  • In comparison with many other cities (including London) Leicester boasts a low operating cost per employee head
  • Ranked amongst Britain’s top locations for raising a family
  • Two international airports are within a 40-minute drive
  • East Midlands airport is the second largest freight handling airport in the UK

Leicester and Leicestershire Enterprise Partnership (LLEP)

As part of the £12 billion Local Growth Fund, the LLEP is aiming to accelerate growth in the region by providing additional funding and attracting investment to facilitate new homes and commercial property. The focus is on providing high-quality skills and the best training facilities, and also delivering significant transport improvements, not only in the city but across the county as a whole.

In 2014 the LLP awarded £18 million to support:

  • A new Skills Training Centre in the MIRA Enterprise Zone
  • The regeneration of Leicester Waterside
  • A new building at Leicester College to accommodate Motor Vehicle Engineering training
  • An 18 mile extension to the great Central Railway, Leicester to Ruddington Heritage line
  • Improving the sustainable transport infrastructure
  • An extension to the superfast Internet service across the county
  • Financing 10 hectares of employment and housing growth (North City Centre Axis Investment Programme)
  • Funding improvements to junction 22 of the M1 motorway, and junction 13 on the A42 trunk road.

In January 2015, an additional £20.3 million was allocated to the LLEP, bringing the total investment to over £100 million, which is easily the biggest capital regeneration fund to be allocated anywhere within the LLEP area.

 

Leicester’s two universities

DMU: a top 50 UK university

The two universities in Leicester (the University of Leicester and De Montfort University) rank highly in the list of the UK’s top universities, both of which are also rated highly among global universities. Both achieve the highest of standards in terms of graduate performance and are highly sought-after centres of study by both national and international students.

The University of Leicester

The University of Leicester was voted top university of the year in 2008/2009. In winning this award the judges took into account the universities evident commitment to quality, its belief in the synergy between teaching and research, and in doing so, quoted the University as being “elite without being elitist“.

The University was founded in 1921; it received its Royal Charter in 1957 and is consistently ranked as a top 20 university nationally. It was ranked:

  • 17th by the Guardian newspaper (12th, 15th, and 14th in previous years)
  • 14th in the Times newspaper. “High Table of Tables.”
  • 17th in the Times newspaper (15, 14th, and 14th in previous years).

The University of Leicester also ranks in the top 2% of universities globally.

De Montfort University

De Montfort University is one of the “newer kids on the block”. As a university it is ambitious, innovative and modern, producing a menu of award-winning teaching that is backed up by world-class facilities. De Montfort University has made giant strides in recent years, leapfrogging into the top 50 UK universities for graduate employability and into the top 50 for student satisfaction. In addition to these accolades, they have also climbed 32 places in The Times/Sunday Times Good University Guide. They are listed as 54th overall, which represents the biggest rise in ranking of any other university in the UK.

De Montfort University (DMU) is a popular choice with international students who are attracted by the universities innovate approach, its high results and its swift trajectory up the rankings table. DMU currently welcomes more than 2,700 foreign students a year from over 130 countries. That number is set to rise in the near future, as the university continues to win high acclaim and invests in its own future success and attractiveness to potential students, with projects like the £136 million campus improvement programme that is currently underway.

The attraction of Leicester for overseas students

The rise of Leicester as one of the UK’s top cities has resulted in more and more overseas students seeking to attend the country’s universities. The area’s status as a leading exponent of high-tech industry, the ongoing robust investment programme and the improved transport links to other countries have all played their part.

The De Montfort Law School at De Montfort University has 1000 students from 76 different countries, while its business school claims over 5000 students hailing from 60 different countries. The £136 million campus transformation programme is set to underpin the ongoing success of this in-demand university.

Statistics regarding UK and the overseas student

The UK hosts more overseas students than any other country apart from the US, with the number of students arriving on our shores increasing year after year.

UK student population: statistics

 

Student life in Leicester

Leicester: the UK's tenth largest city

Leicester is a great city for students. The tenth largest city in the UK, Leicester is a very cosmopolitan and friendly place. The local population of 330,000 welcomes its 30,000 strong student body with open arms as an important part of the city’s modern heritage and a major contributor to its economy.

With a strong sense of ethnic diversity, student social life is spread throughout the city, underpinned by the success of the local economy, of which Leicester is the key mover and shaker. There are plenty of great open green spaces and the city also boasts the largest outdoor market in Europe – something that the discerning student on a tight budget can take advantage of.

Transport facilities in and around the city

Moving around the city is easy. The travel infrastructure includes:

  • A low-cost bus network complete with travel cards
  • Miles of well maintained, safe cycle-ways
  • Access to London by rail in just over an hour
  • East Midlands and Birmingham airports within half an hour’s drive
  • Excellent road and motorway links supported by the national coach network

Sports and Entertainment

Sports lovers are well catered for too. The city has a large selection of sports on offer, including golf, football, rugby, squash, swimming and tennis. In terms of professional sport from a spectator’s point of view, the city’s facilities include:

  • The King Power Stadium – home of Leicester City Football Club
  • Grace Road – home of Leicestershire County Cricket Club
  • Welford Road – home of Leicester Tigers Rugby Football Club

In addition, nearby Rutland Water is the venue for a variety of water sports.

With regard to nightlife, students can enjoy some big name DJs, and listen to the many great bands that play in large venues, such as The Curve, De Montfort Hall and Phoenix Square Digital Media Centre, plus a variety of clubs and pubs spread across the city. There is also the 12 screen cinema complex at the Highcross Centre, and numerous quality eating houses.

The annual Comedy Festival held in Leicester every year is a big hit with students. There are also a whole host of carnivals including the Caribbean Festival, and the Diwali celebrations, which are said to be the largest and most entertaining outside of India itself.

There is something for students of all origins and persuasions.

 

The case for investing in UK student property

Purpose Built Student Accommodation: the UK's highest yielding property investment

Buying student property in Leicester is one of the most lucrative opportunities for both investment and earning. Even when investments in other industry sectors are under-performing, student property was one of the top performing sectors, according to international real estate agent advisors, Savills.

The growth of student property to world class asset status

In global terms, since 2007, investment in student housing has risen from $3.4 billion to $7.2 billion in 2013. When figures are available for 2014, it is expected that this will be even higher. Although institutional investors have generally led worldwide investment (accounting for in excess of 57% in terms of volume of sales), it is still being confidently forecast that that the private sector will leap to the fore, claiming a larger share of the ever-expanding student property sector.

The global financial status of higher education on the world stage is currently estimated at $164 billion. Over the next decade, the worth of this sector of the economy is expected to rise by a further $32 billion, bringing the total value to nearly $200 billion.

In terms of international students domiciled in foreign countries while they study, their numbers are expected to swell to an enormous 3.9 million heads.

The rising demand for Purpose Built Student Accommodation

Purpose built student accommodation (PBSA) provides an opportunity for reliable earnings. Even though the tenures are relatively short-term, these properties are always in constant demand and are currently in extremely high demand.

With the forecasted growth in international student figures being as high as it is, and with the limited number of new student property developments, now is a great time to invest. This is especially so at the top end of the market, where the number of students seeking more luxurious domiciles significantly outweighs both the number of quality properties in existence and those still at the planning stage.

As far as the predicted increase in mobile international students is concerned, we are seeing more and more students looking for “high-end” accommodation. The student property sector, which traditionally has focused its attention on the domestic supply of students, is lagging behind with regards to attracting wealthier international students.

Leicester at the forefront of demand

University cities like Leicester will be at the forefront of the increase in international student numbers, thanks to the reputation of its universities and local attractions. The recent discovery of the remains of Richard III, one of England’s most celebrated Kings, has also served to focus the spotlight on this part of the UK.

The future influx of students will increase demand for luxury accommodation further. The time to invest has never been better, and with more cash flowing across international borders, and the strengthening of the UK economy in general, a rise in international investment is certain.

Pattern of overseas student demand

Students are coming to Leicestershire’s universities from a broad spectrum of different countries, but the most common one is China, with over 650,000 students studying abroad – a figure which doubled between 2007 and 2011. Most of these students are domiciled in the US and the UK, though Australia, Germany and Japan are also popular choices.

India has the second largest number of expatriate students, with most of these 196,000 students studying in the UK and the US, while South Korea comes third with 128,000 students domiciled mainly in Japan and the US. The next emerging large producer of international students is said to be Brazil.

 

Why invest in student property in Leicester?

Why choose Leicester?

In July 2014, an important ceremony took place on the campus of De Montfort University signalling the commencement of a regeneration programme that will transform the University. The cost of the program has been estimated at £136 million, and it signals the clear intention of De Montfort University to continue its meteoric rise through the UK and world rankings tables.

Scope of the DMU Campus Regeneration

The redevelopment program will not only provide more world class high education opportunities, but will also increase the number of students looking to come to Leicester, enrol at De Montfort and take part in what promises to be a great new learning experience.

Strengthening Links with China and Chinese Students

That this exciting new development has the welfare of the international student body at its core is attested to by the creation of the Jonathon KS Choi Creative and Cultural Centre – a development that will provide students (and Staff) from all over the world with a superb purpose built facility for the furtherance of study and in-depth research.

It is funded in the main by the Sun Wah Group, a Chinese business conglomerate that has already developed robust connection with De Montfort University via the business school it has funded at Lioning University in China. Dr. Jonathon Choi (chairman of the Sun Wah Group) and Professor Dominic Shellard (Vice Chancellor of De Montfort University) were present at the project’s opening ceremony, and dug the first spades into the earth to signal the symbolic commencement of the works.

The centre will also provide a new home for De Montfort’s “Confucius Institute” – a facility designed to nurture and promote the culture and language of China. This is a significant move designed to attract the largest body of mobile international students in the world today, and in the future.

New Facilities

The project is a mammoth one in terms of scope and includes:

  • A new centre for art, design, and humanities
  • The re-housing of the highly acclaimed Confucius Centre
  • The rebuilding of the Fletcher Tower – a significant new landmark for Leicester City centre
  • New outdoor giant video screen
  • A new centre of the Students Unions and its events
  • A new “green lung” area in the heart of Leicester City
  • Improved Wi-Fi and Solar installations
  • A superb riverside location.

Speaking after the opening ceremony, DMU’s vice-chancellor said the beginning of the new development project was a historical day in the life of De Montfort University. He went on to say that the new buildings will provide a similar experience to that of the Gucci or Prada workshops, which will help students to study and prepare for finding work in the design and fashion industries on the world stage.

The collaboration between the British and Chinese governments is sure to support student migration in the future. For his part, Dr Choi is reported as saying that the centre is a noteworthy advance in the relationship that exists between China and the UK, and that it will provide an ideal platform not only for the students at De Montfort University, but for the citizens of Leicester city as well.

The bulk of the project is expected to be completed by the end of 2016, so now is the perfect time for companies to consider investing in student property here in Leicester.

Undersupply of Student Property in Leicester

As with most sectors of the economy, one must also look at the risk factors. In the higher education economy there are several. They include:

  • Rising tuition fees
  • Improvements in the hi-tech world making distance learning more viable

But even when these risks are taken into account, and the impact they may have on the future trend of international student numbers, student property availability is so far behind demand in most cities that further significant investment can easily be justified.

 

Introducing Tudor Studios

Tudor Studios: new build Purpose Built Student Accommodation

The announcement of the £136 million redevelopment programme at De Montfort University is evidence of the rich investment potential of the area that Emerging Property are tapping into with the Tudor Studios student property investment – a mere 600 metres away from DMU’s campus.

Tudor Studios offers students luxury accommodation a stone’s throw from the new transformation project. The quality of the accommodation is amongst the best to be found anywhere here in the city of Leicester. Not only are students on the doorstep of their learning facility, they are also within five-minute walk of the city’s many superb facilities, including its world-class shopping and great nightlife. The state-of-the-art leisure centre is also within easy reach, as is the beautiful riverside environment of the university campus with its landmark facilities.

Tudor Studios has 255 student rooms, providing a great opportunity for students to mix and make new friends and enhance their quality of life while studying.The undergoing redevelopment programme at DMU is sure to increase demand for student places in the coming year. Now is the ideal time for investors to purchase a student room that is sure to become highly sought-after, not only by students from here in the UK, but also for international students coming here to Leicester to live and study.

As tuition fees in the UK continue to rise, there is now an associated expectation from the student body that students are provided with a higher standard of student accommodation. More and more students have the necessary funding and as a result are looking for a more luxurious standard of living. Emerging Property is uniquely positioned to help you to exploit this opportunity through our in-depth industry knowledge and consultative experience.

 

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