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A bright forecast for student property investments

Jul 11, 2017

Savills plc is a London Stock Exchange listed global real estate services provider. The publishers of regular reports on the property market and its current trends, their 2017 edition of the Spotlight on UK Student Housing has recently been released. Here are some of the key findings that you may find of interest.


Soaring investment activity

In 2016, 68,000 student accommodation units were traded in the UK – 54% higher than the average over the past five years. The total value of these transactions was a hefty £4.5 billion.

This trend is expected to continue in 2017, with a predicted 75,000 units changing hands for £5.3 billion – a year on year increase of 17%.

The report also notes that despite continuing confusion surrounding the Brexit vote and its fallout, more trading took place in 2016 after the referendum than before it – over £2.1 billion versus £1.9 billion.

Overseas investor appeal

This may well be a consequence of the collapse of the pound immediately after the poll, when it had a 10% plummet against the US dollar to reach a 30-year low. Indeed, two of the biggest players in the sector only arrived here last year.

In fact, overseas investment in UK student property has leapt from 35% of all transactions in 2014 to 64% in 2016 – firm evidence of the asset’s appeal regardless of political and economic uncertainty.

Much in demand

Existing owners will be pleased to hear that there isn’t enough current stock available; of that £4.5 billion mentioned above, 25% of it went on forward funding developments.

This emphasises our oft-made point that an operational property with proven rental generation is hugely attractive to buyers; even more so when the property comes with a fully transferable, contracted NET fixed income of 8-10%. The prudent application of yield compression can also land you up to 40% capital growth.

Sites matter

When analysing locations, the report stresses that well-placed developments in thriving markets will benefit from consistent occupancy and increasing rents; site selection is critical. This has long been our watchword and is core to the way we handpick our close-to-campus locations.

UK property investment advice

A safe haven

At the corporate level, the fact that the big lenders, particularly EU and UK banks, are increasingly willing to back student housing projects is yet another indicator of how the sector is recognised as secure; another reassurance for the private individual investor.

Accommodation of choice

With annual tuition fees up to £9,250 for the next university intake, there is evidence that students are being very choosy where they apply so they get the most out of their overall university experience.

They are right to do so, and modern, comfortable, well-equipped and conveniently-sited student accommodation is an important factor in their shortlisting process. That’s why we only consider ambitious universities with excellent facilities and a track record of popularity with students.

A home from home

Overseas students make up a significant proportion of the UK’s student body, with 112,000 from the EU and a further 285,000 from elsewhere around the world – representing just under 23% of the total.

They contribute £25 billion to the UK economy (Universities UK) – and they need somewhere they can call home for the duration of their degree. With the exchange rate set to remain in their favour for quite a while to come, Savills estimate their numbers will grow by 6% each year.

All our properties are located in university towns with high overseas student registration and we’re pleased to welcome them to a safe, secure, fully-managed haven with state of the art facilities.

After all, as the report points out, they are important to what it terms Britain’s “soft power”. One in seven current world leaders studied over here, according to the British Council, so we as a nation need them to go home with fond memories.


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