Does anybody know of the pros and cons of buying a unit in a purpose built block of student accommodation?
Given that the income yield is high, what is the capital gain potential for this type of investment on resale?
Regards
Shadow
Any capital gain on a student specific property will simply have a couple of additional factors to consider. Namely how well the nearby college of university is performing and how popular it is. If it is an expanding college with money being spent on it, demand for courses is likely to be higher and more students will want to attend. If it is poorly maintained and not regarded well, the reverse I would suggest could be expected.
The surrounding area and the development of it will of course still impact the property values in the same way they would with a "normal" property.
Of course there is one other possible spanner in the works to consider, and that would be any changes in student funding. If that rises or drops, then there would likely be an impact further down the line.
With student specific accommodation you do have the double edged sword of the captive market. Students need to live somewhere, and have (although sometimes limited) money to spend. Your rent is secure to an extent with terms and so on, and there is a lot of natural marketing from the student unions and the universities themselves.
On the downside, if the accommodation is restricted to student use only, if the university begins to get a bad name or low attendance, then you are a bit stuck unless you can get change of use.
Not a definitive answer I know, but hope it gives you an insight into the possibilities!