Investment in student property set to increase

More landlords are looking to invest in student property, according to new research.

Rising rental values in the sector are persuading more investors to purchase in the sector, according to data released by Knight Frank.

Increases

Investment in student property in Britain reached a record high of £5.1bn in 2015, a figure more than double the £2.41bn recorded one year previously.

The firm suggests that year-on-year growth during this year will follow the pace set in 2015, meaning there will be a rental uplift of 3.5%. This will give would-be investors a fairly secure income.

Knight Frank also predicts that the development pipeline for purpose-built student accommodation will slip during 2016, particularly in London.

Both London and Manchester are examples of cities with substantial student populations but modest delivery deadlines. That is the view of Neil Armstrong, partner at Knight Frank Student Housing Valuations.

Investment in student property set to increase

Solid

Mr Armstrong said, ‘in 2015 Student Accommodation showed rock solid occupational demand supply credentials. Rental growth averaged at 3.65% as student numbers grew and supply struggled to meet demand. Whilst the macro picture (3.65%) is relatively steady, each market demonstrates different credentials largely depending upon the current level of structural under supply together with the development pipeline and its delivery in any specific year.’[1]

In retail, office and industrial, student accommodation offered large capital (15.3%) and total returns (21.5%) during 2015.

James Pullan, head of Knight Frank Student Housing, noted, ‘of the 49,271 student bedrooms transacted in 2015, over 46% were acquired by Institutions. This wave of Institutional investment has now polarised the market such, that assets which fail to meet institutional specification have much reduced liquidity.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/5/investment-in-student-housing-set-to-rise