So many investors are inclined to equate student property investments with risk. It’s true that students can have a reputation as loud and untidy, which doesn’t bode well for potential investors concerned about the security of their buy to let units. However, there’s a lot more to learn about student investment opportunities that may very well convince you that it’s a great time to invest!
Firstly, students are changing. There’s a greater majority of savvy undergraduates about who want to avoid run-down university owned halls and cramped, shared housing in favour of newer, purpose-built student accommodation.
A fulfilled university experience isn’t all about trashing the place, and today’s students are keen to reside amongst luxurious furnishings and onsite facilities. It’s also important to remember that postgraduates studying for Masters and PHD qualifications are also classified as students, and are more likely to demand upgraded styles of student housing suited to a more mature clientele.
Now that you’ve changed your perspective of a student, it’s time to establish just how profitable this property market is. Investors are quick to assume that the amount of student tenants is inferior to those in the residential sector. This is essentially true, although quantity should be analysed in coherence with stock supply.
Recent reports make it clear that the supply of student accommodation is falling shot in comparison to the number of students. There’s a total of 2.32 students studying in UK institutions, and only a quarter of these have access to accommodation tailored specifically to their needs.
As RWinvest state, ‘PBSA remains undersupplied, so there are now huge opportunities across the UK for investors’. Tenant demand is at its uppermost, and rental returns are spiking because of the rare market conditions.
This leads into another common investor fallacy which believes that student property cannot provide the same rental returns as residential. Well, student developments can in fact obtain better yields in hotspot locations, and are assuring returns as high as 8% for periods as long as 5 years in a reflection of developer confidence.
Rental growth in the student sector increased by 2.9% in 2017, and although this rise is predicted to remain throughout 2018, plans for more and more beds are being proposed for the future to combat the sky-scraping demand. This proves that there’s no better time than now to invest in UK student property where rental returns are able to sustain record highs.
Some investors also worry about putting their money into newer, off-plan student developments, thinking them dangerous and rather unsecure. We can’t deny that there is always some level of risk involved in purchasing investment property, but don’t let off-plan steer you off track.
One benefit of most new student property opportunities being off-plan is that as an investor, you have the first pick out of brand-new units. Modern design and state of the art facilities are just what student tenants are looking for, and full management services are also available on most off-plan student developments.
And if this isn’t enough to convince you, off-plan properties tend to be more affordable because developers recognise the tension evident in this surprisingly advantageous property market. You can reap the same returns as other developments, but at a much lower price.
Overall, student property investments provide investors with an exciting and lucrative way into UK property and it’s rewarding to do your research before passing judgement on this ‘underdog’ property class.