WHY IS NOW THE TIME TO INVEST IN STUDENT ACCOMMODATION?

Discussion in 'General Property Investment Discussion' started by Gareth Bain, Nov 9, 2018 at 12:00 PM.

  1. Gareth Bain

    Gareth Bain Member Forum Partner

    Since 2011, student accommodation has become a popular investment sector with increasing student numbers, fixed rental returns and an easy-to-understand concept. Today, Purpose-Built Student Accommodation (PBSA) in the UK continues to tempt wealthy investors and sovereign wealth funds. The UK PBSA market itself is currently worth £46 billion according to Knight Frank estimation back in 2017. But with the Brexit threatening to cut the numbers of high-spending foreign students, why do these high-profile, educated investors continue to jump to the opportunity?

    STUDENT NUMBERS CONTINUE TO GROW
    Contrary to popular belief that less foreign students will opt for Britain to receive their higher education qualifications; the British Council predicts that the number of international students is set to double to 8 million by 2025. In June 2013, the statistics provided by UCAS confirmed that the number of applications increased by 3.1% overall compared to the previous year with the biggest percentage increase in applications coming from non-EU applications, particularly places like Malaysia.

    With numbers like these, the future looks prosperous for the UK despite Brexit concerns. Given the sustained upward trajectory of university student numbers, investing in student accommodation could be less affected by external factors which could influence other property investments such as the traditional buy to let.

    DEMAND OUTSTRIPS SUPPLY
    With the increasing student population and the globally recognised universities available in the UK, students from all over the world will continue coming, creating a high demand for rooms. Research suggests that at least 300,000 more rooms will be needed in UK universities across the country.

    But it is not just the arrival of international students that are driving the market, the number of domestic young people in the country going into higher education is on the rise. The number of young people aged 20 looking to get a university degree has increased by nearly 25 percent since 2006.

    But why the need for a Purpose-built student accommodation when there used to be so many landlords offering to let out their houses in the suburbs to students as opposed to families? This all comes down to the changing demands of the millennial mindsets. In today’s world the shared house stripped down to the basics is just not enough! Young people lean towards branding as well as comfort which newly built PBSAs offer along with the promise of a modern space with learning and leisure facilities and of course, unlimited Wi-Fi.

    STUDENT ACCOMMODATION OFFER HIGH YIELD INVESTMENTS
    Investing in student accommodation as a property investment offers investors a very good rental yield and property investors are generally investing into a very stable “income generating” scheme. To get a lease, students are generally required to provide a guarantor, which ensures that rent is paid on time and in full.

    To add to that, managing a buy-to-let investment these days can be a hassle, especially when your tenants are students. When you take into consideration all the maintenance and management of the tenants. Investing in student accommodation is hands-off as the block is managed by professional management companies.

    INVEST IN STUDENT ACCOMMODATION THROUGH CROWDFUNDING
    So, if you are undecided about where to invest in property in the UK, Shojin Property Partners recently launched this exciting property investment opportunity scheme in the popular university town of Nottingham on its property crowdfunding platform. The development consists of 124 studios and is minutes away from the campuses in Nottingham. A student accommodation of this scale was of such popular demand that all the units were snapped up before the building was even completed.

    The building is estimated to generate almost £1 million per year in rental income and, after all costs and taxes, provides investors with over 5% dividend yield. Overall annualised return on investment is expected to be 10%-12% per annum over a period of 3 years.

    From as little as £5,000 property investors can invest in this project as well as other on the Shojin property crowdfunding platform. Visit Our Products page to find an opportunity that is suitable for you or read our blog ‘Where are the current investment opportunities’.

    Visit our website & register: www.shojin.co.uk and follow us on Facebook, Twitter, YouTube and LinkedIn for all property related news, tips and updates.
     
  2. diyhelp

    diyhelp Active Member

    Are there any up and coming university towns you would recommend? I have read about this strategy in the past which has worked very well in places such as St Andrews.
     
  3. FWL

    FWL Member

    I would tend to stick with the established Universities - if it aint broke why fix it?

    I was thinking the only threat would be the government cutting funding for education but they cant afford to reduce this otherwise they would be hammered at the ballot box (as would future governments).
     
  4. Gareth Bain

    Gareth Bain Member Forum Partner

    Research shows that student numbers are on the increase year on year. Despite Brexit next year, the UK is seeing an increase from students from all over the world and if GBP drops next year due to uncertainty, it would be even cheaper for parents to send their children to University in the UK.

    Another thing to consider is that if a Financial Crisis happens next year or the year after, more people are inclined to go to university or study for longer as there could be a shortage of jobs.

    Regarding University towns, it is always wise to put yourself in the shoes of the students. Where would you want to go as a student to study in the UK? Think of the surroundings, transport links, the reputation of the university and type of degree are all good starting points.

    To find out more about our latest student project in Nottingham visit https://www.shojin.co.uk/property-investment/available
     
  5. I lived in Manchester about 20 years ago and even then it was an up and coming university city. Would be interested to hear your views on Manchester and investment in student accommodation.
     
  6. Gareth Bain

    Gareth Bain Member Forum Partner

    Manchester is not only a great Student town but it is also one of the bigger metros in the UK. However in recent years, there has been a lot of construction works taking place in the city which has resulted in some developments struggling to be filled.

    In my opinion, I think there is a lot of stock available in Manchester at the moment and with all these new builds which have gone up in recent years, we could see foreign students buying a property in these blocks for the short term.

    That being said, there are pockets in Manchester and Liverpool where you can find opportunities. However they are a lot harder than other university towns due to the current supply.
     
  7. lookinginvest

    lookinginvest Member

    I totally agree Gareth, Manchester is one of the leading lights in the North West and indeed one of the leading lights in the UK. Not only is there a buoyant market for student accommodation but the local economy is also doing well. When the BBC moved lock stock and barrel to Salford that really put the area on the map and not only assisted local businesses but attracted new investment. I am not sure if the tram system has been extended in recent years but that is also a massive positive.
     
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