This week has seen the continuation of a frenzied buying spree of UK student accommodation with demand reaching fever pitch earlier this week when £670 million worth of transactions were completed. Historically student accommodation has been very drab, very basic and very cheap but students of today are demanding much higher standards of living and accommodation.
Guernsey-based International Mutual Fund has this week put up for sale assets worth £400 million which generate income of £37 million a year. This is a very healthy return although when you bear in mind that student rents across some parts of London can top £500 a week this shows just how healthy the market is. This portfolio includes properties from across the 12 University cities of the UK although the likes of London, Manchester, Oxford and Edinburgh always seem to grab the headlines. In total 5,507 student beds will be changing hands in the not too distant future.
As we touched on above, there has been a significant buying frenzy across student accommodation in the first four months of 2015. When we inform you that £4.2 billion has been invested into this particular market in the four months to the end of April, compared to £2.5 billion for the whole of 2014, perhaps this shows the true demand for student accommodation.
There was always been significant demand from within the UK but there is serious investor interest, and in deed deals have been completed, from parties based all around the world. It would be unfair to suggest that student accommodation has suddenly become a “property hot potato” but there is no doubt that demand has grown significantly of late and continues to blossom.
Why such demand for student accommodation?
Further education has been the gangplank of many political party manifestoes over the last few years and indeed it has led to a significant number of political battles. This is likely to continue for the foreseeable future and while student fees may increase in the longer term the ability to pay off these fees as and when employment is secured further feeds into the student accommodation market.
The ability to delay the repayment of student debt would seem to allow many students to concentrate upon better quality accommodation. The modern-day student “digs” now consists of luxurious accommodation, cinema rooms and gyms. The days of dingy basement flats, one bedroom accommodation and a lonely life while studying have certainly gone!
It looks as though investor interest across the UK’s 12 university cities will grow significantly in the short, medium and longer term. We are now talking of student accommodation deals in hundreds of millions of pounds with interest from all corners of the globe. The beauty of student accommodation is the fact that any students finishing a university education are routinely replaced by a new crop of students creating massive demand for accommodation.
There are a number of schemes available today allowing you to invest in student accommodation although as ever you should take financial advice before investing in any property transactions.