Why Student Accommodation as a Real Estate Investment?

For years, the UK has remained a highly regarded centre of education and is home to some of the best universities in the world. Driven by this demand, student accommodation offers an incredibly lucrative real estate investment opportunity – and here is why. 

Because the usual macro and micro-environmental forces that impact buy-to-let do not affect students property, Purpose-Built Student Accommodation (PBSA) can offer excellent returns on investment. It is a sector that can stand on its own and has a proven track record of strength and resilience in times of recession.

Similarly, student property stays one of the few areas untouched by the current political and economic uncertainty and has the potential to offer fantastic long-term returns.

 

And why?

 

Firstly, the number of UK students continue to grow. In 2021, there were almost 749,570 applications for full-time undergraduate places through the UK Higher Education Board UCAS – 562,060 of which were accepted. 

International student numbers also remain strong, as the number of pupils from outside the EU has increased by 19%, and overseas students now make up around 12% of acceptance through UCAS. These numbers prove that international students have continued to relocate to the UK, despite Brexit worries, and these figures are highly relevant as 94% of international students are likely to rent.

But the country’s objective does not end there. The UK is now keen to increase student numbers by 30% over the next decade, which means demand for student accommodation will only continue to rise for the foreseeable future.

In addition, the UK has a long-standing stature as a global leader in higher education, home to some of the most prestigious universities in the world – The University of Oxford and Cambridge.

Unsurprisingly, demand outstrips the supply of student housing, and the universities themselves cannot meet this growing need. As a result, the private sector delivers today the vast majority of the capacity and PBSA has grown to become an attractive real estate investment prospect.

 

More benefits of investing in student property:

 

  • Flourishing market – 2020 was a record-breaking year for PBSA, with £5.77bn of investment in the PBSA sector in 2020. Additionally, throughout 2020, a number of 33,000 new student beds were created in the UK, bringing the capacity to 660,000 – but still, that has not been enough. Across the country, there is still a reported 2.7 student bodies to every available bed, showing the clear need for more PBSA and flooding of the market is certainly not an issue. In addition, 88% of students still chose to live in student accommodation, despite concerns about the pandemic.
  • Prime location – PSBA offers an excellent central location, with universities within walking distance and the city centre on its doorstep – increasing the chances of high yields and capital growth. All amenities are minutes away, perfect for students looking for quality accommodation with the best of the city.
  • Hassle-free & rental guarantee – Thanks to rental assurance periods, your rental income remains secure no matter what happens with a development. In addition, most PBSA has building management, maintenance and security, offering investors a hassle-free, fully managed investment.
  • Strong retention rate – Designed to encourage a sense of community and unique living experience with high-quality services, PBSA generally offers a higher retention rate as tenants are more likely to stay longer.

Get in touch below for more information about student accommodation real estate opportunities.

 

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