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Purpose built student accommodation investments: A Brexit-proof investment

Student property brexit proof investments
Jul 23, 2016

The yield capability of purpose built student accommodation (PBSA) will not be reduced by the UK’s exit from the European Union.

In fact, there is the potential for the demand for student housing and accommodation to increase as a result of the distinctive characteristics of student rental accommodation demand.

Does this mean that student accommodation is a Brexit-proof investment?

 

Record student numbers

Whatever happens to the economy in general, PBSA will continue to pay its way as long as it is occupied year on year. Student accommodation rental demand is solely linked to student numbers, which have sustained an upward trajectory since records began. Indeed, there have been record new student numbers in each of the past four years.

The construction of purpose built student accommodation has failed to keep pace with the growing demand, which is good news for those looking to invest in student accommodation and housing.

With no limit on undergraduate student numbers and globally renowned universities able to attract students from around the world, high demand for investment and students renting rooms will continue.

Purpose Built Student Accommodation sector

 

EU & international students

EU students make up a fraction of the total population, with 7.3  overseas student applicants in 2015 for every one international EU student (UCAS). CBRE also points out that only 2.4% of university funding comes from non-UK EU student tuition fees, compared with 12.7% from overseas students.

Regardless of this, the UK’s prestigious education system and English language environment means that it will always remain a popular destination for both EU and non-EU overseas students.

Alongside this, the weakened pound increases the affordability of a UK education to many students, therefore creating a higher demand in student rental accommodation and investment.

 

UK universities not depending on EU for funding

A report from CBRE forecasts that purpose built student accommodation will be resilient to Britain’s exit from the European Union (Brexit).

According to UCAS, there were 7.3 overseas student applicants in 2015 for every one international EU student. CBRE also points out that only 2.4% of university funding comes from non-UK EU student tuition fees, compared with 12.7% from overseas students.

How to invest in property - universities

 

 

Benefits of short-term sterling slump

Brexit has caused what is likely to be a short-term decline in the value of British currency, but the UK’s exit from the European Exchange Rate Mechanism (ERM) in 1992 points to the many benefits of this.

The reduced value of the pound will be balanced by a rejuvenated export sector. Overseas investors will also be able to take advantage of increased purchasing power, building on the UK’s record year for commercial property foreign investment in 2015.

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UPDATE: A-level results day 2016 actually saw an 11% increase in EU students being accepted onto degree courses, with a 3% increase overall – another record year.

 

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