Student accommodation: Why it’s a great investment
Student accommodation has become a popular investment option within the UK over recent years. According to an article in the Financial Times, written by Tanya Powley entitled 'How to... invest in student property" the student sector has "ballooned from a fringe investment 10 years ago, to a global market worth $200billion today."
This growth is due to a rise in students attending educational institutions in the UK. According to HESA (the Higher Education Statistics Agency) further education student numbers have increased across the UK by over 21% between the years 2000 - 2011.
Across the UK there is a notable under-supply of purpose-built student accommodation in prime locations, therefore many investors are benefiting from the development of such property.
Investors are also attracted to this asset class due to the high returns on offer. According to the Knight Frank Student Property Index, 2012, average rents for student apartments and en-suite rooms rose by 4% in 2012 and are anticipated to rise by a further 5% in 2013. They forecast returns of up to 10% for 2013 too.
How to invest in Student Accommodation.
There are a number of ways to invest in student property. Many investors are attracted by the higher yields offered when purchasing a property and letting it out to students. However, as with any buy-to-let investment there are potential issues to consider. It can prove to be time-consuming, difficult to attract tenants, leaves you vulnerable to gaps in rental yields during the summer months and of course the costs of the maintenance and upkeep of a student property - which are notoriously known for extensive and expensive damages. Location is also a major factor for consideration, as where you invest will have a massive impact on your returns - you may not live close enough to a suitable, or affordable student location - and the prospect of managing a property over 300 miles away may not be suitable for everyone.
There are also student property funds available, that provide a more affordable option for those that do not have the access to the sums of money required to purchase a student property directly. The process of investment can be complex however, and the yields provided are generally lower in comparison to other options. Individuals also have a limited amount of control over their investment once it has been made.
A final option would be to invest in a developer. Offering a secure investment, this generally proves to be a popular option for many. The location and maintenance of the property are less relevant, as they do not have to manage the property directly. Returns are comparable to investing in your own student property, but with the added benefits of the completely hands-off approach to the investment. You also have more control over the investment than you would when investing in a fund.
Select Portfolio currently offer for sale a limited number of rooms within fully managed student accommodation projects accross the UK.