Purpose Built Student Accommodation (PBSA) recently received further confirmation of its world class asset rating. A recent report published in the Wall Street Journal commented on the fact that with returns reaching highs of 13.9% at the end of 2014, this relatively new investment sector is now worth £2 billion.
- Record UK student numbers
- Prime regional property investment locations
- Benefits of off-plan student properties
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Record UK student numbers
In August last year 396,990 new UK students were registered into UK universities according to the Universities and Colleges Admissions Service (UCAS). It’s a record high. This prompted universities to offer an additional 30,000 places to be filled.
The latest forecast on student population growth is that it will expand by another 60,000 as students register for the 2015/2016 academic year. With more than 600,000 applications already having been received by UCAS early this year, this forecast will easily be met.
Demand for Purpose Built Student Accommodation (PBSA) stems in the main from international students. With a current student population in Higher Education (HE) totalling 355,580, and with the forecast predicting this will increase by between 15% and 20% by the year 2020, demand for PBSA will increase even further. Given the current and significant undersupply of properties, this bodes well for further investment opportunities.
Prime regional property investment locations
Another significant fact about the student accommodation market is that it is geographically widespread. Most other commercial property investment opportunities tend to centre round London. Here, prices are at record levels and are being driven even further out of reach by the demand for what is, a very limited stock of property.
The regionality of UK university distribution is part of the HE system’s strength with cities like Leicester and towns like Loughborough being highly sought after by international students because of the high standing of their universities in world class rankings. The fact that these locations also offer quality PBSA adds to their attraction even further.
Benefits of off-plan student
Having now been given a world-class asset rating, PBSA investment opportunities are becoming increasingly popular. The below market value of off-plan investments helps to further increase potential yields.
International students have high expectations about their accommodation arrangements. PBSAs appeal to them because of their upmarket facilities, fixtures and fittings that make them an ideal environment for studying and socialising.
The fact that this new breed of student is replacing the previous “study on a budget” stereotype, is an even bigger attraction for investors – as it promises better rental yields both now and in the foreseeable future.