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Provided by Select Property
13 April, 2015
5 tips for investing in the UK's top performing asset class
Student property in the UK is becoming one of the most profitable investments in the world. Here are a few things to consider before you await your monthly returns.
Having recorded annual growth each year throughout the economic downturn, Knight Frank highlighted UK student property as the investment choice that is currently outperforming all other UK asset classes.
An accessible asset for investors the world over, if you're thinking about making a new property investment, here are five things to consider about UK student property that will help you to make the most informed decision:
1. The time to invest is now!
Demand for new student property is strong, and it is only set to continue in the coming years. UK university enrolment numbers are at a record high (659,030 students submitted applications to higher education institutions in 2014), whilst international student numbers have increased by 100% in the last 10 years.
A critical undersupply of both purpose built student accommodation (PBSA) and homes of multiple occupancy (HMOs) have helped rental returns grow annually by 3% on average. Quite simply, there's never been a better time to invest in student property.
2. Choose quality PBSA over HMOs
A lack of high-end PBSA in university cities across the UK has meant that many students have long been forced to choose unsuitable HMOs that are often run-down and unregulated.
But today, UK students don't want to live in poorly maintained HMOs. There is a clear demand for new, modern PBSA developments with self-contained studio apartments that enhance the overall university experience – and students are willing to pay a premium for it, up to 70% in some cases.
3. Carefully choose your location
First, you need to consider the city a student property is located in. How many established universities are nearby? An institution that is part of the elite Russell Group of British universities (such as the University of Glasgow) will always be in demand from both domestic and international students seeking the best education. High student numbers in these cities will mean that the demand to rent student property is likely to be consistently high.
Secondly, choose a development that is close to local universities and key central amenities. Savills found that 55% of respondents aged between 18 and 25 to its 'What Tenants Want' survey in 2014 stated they were prepared to pay more to live near work or university.
4. There's a growing demand for student accommodation brands
Knight Frank recently identified brand building as the next big opportunity in the student accommodation investment market. With the influx of international students has come the demand for developments that provide a familiar touch point to call home in a new and often strange city. Booking with a brand name students trust can help them to be assured they're choosing quality accommodation.
5. Research the track record of any PBSA brand or provider
Has the brand or company behind a student property development got an established history in the market of delivering quality accommodation that is fully-tenanted and delivering strong returns for its investors? As with any investment, ensure that you complete as much due diligence as you can and don't be taken in by yield claims that seem too good to be true.
For more student property investment guidance, Select Property Group has published its latest investment guide, The Future of the Student Property Investment Market, giving a comprehensive overview of the current performance of the UK's student property market and the forecast for the next few years.
Select Property Group, the creator of the UK's only experience-led student accommodation brand, Vita Student, is launching its 10th PBSA development in Glasgow. With an established track record of delivering fully-tenanted, luxury student properties across the UK, Select Property Group can assure investors returns of 7% over the first five years.
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