Investors target student property for lucrative returns

by Daniel Jones

Student property continues to be a hugely popular investment for landlords and businesspeople, as it all but guarantees a healthy return.

New figures from CBRE show that more than £1.6 billion was pumped into student accommodation in the first nine months of this year, as investors seek to cash in on the rising demand for places to live among young academics.

The CBRE's Student Accommodation Index has revealed that there was a 9.95 per cent return on this type of property in the 12 months to September 2013. This meant that renting out homes to undergraduates was more lucrative than owning office, industrial or retail property.

Jo Winchester, head of student housing advisory at CBRE, said that one of the factors behind the positive trend in the market is the boom being experienced in the international students market. A huge number of people are coming from overseas to study in the UK as the demand for English-taught degrees grows.

"The result of this popularity is reliably high occupancy rates in student residences and stable income streams, making the sector an attractive prospect for small and large investors alike. According to our Index, rental values for student accommodation in regional towns have increased by an average 3.5 per cent in 2012/13, showing healthy growth across the UK," she stated.

Education was the government's fifth largest services export in 2011, underlining just how valuable it is to the country. It's ahead of other major markets, such as insurance and computer services.

Strong government support for higher education in 2013 is believed to have boosted the confidence people around the world feel in British universities and degrees. As such, it's an attractive place for many people to study.

It's therefore no surprise that so many people are investing in student property with the intention of renting it out. Doing so can prove to be a shrewd financial investment in the long run.

Published on: December 9, 2013

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