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Student property gathers popularity as a mainstream investment

16th January 2015 Print
Student property

Over the past few years the property market has been gathering momentum and slowly returning to near where it once was. This has meant that investors have really taken the opportunity to purchase property at good prices in the hope that they will increase in value over a long period. Whilst the rental market can be troublesome at times with tenants causing problems of non-payment of rent or damaging the property, more and more investors are now turning their hand to the student property market.

The student property market has seen steady growth in recent years and investors are now beginning to see the returns on the money they invested thanks to the high yields and continued demand from students each year.

A report published by CBRE looks at the student property investment sector and has found that 2014 has been the best year on record. The past two years has seen investment grow and the amount invested has topped £2 billion for the first time ever but 2014 has seen more activity and more investment.  In 2014 investment reached more than £2.369 billion. CBRE has forecast that the figure is going to increase once again in 2015 as the sector continues to improve.

For those who invest in student property their returns and high yields are governed by the amount of demand from students. If student numbers continue to sit at a high level then there will always be tenants looking for properties to rent. In recent years there has been a huge increase in tuition fees which left many concerned that this would have a serious effect on the number of students looking for accommodation, but this has not been the case and demand has continued to grow. 

During 2014/15 UCAS stated that the number of undergraduate students who had entered the education system was sitting at a record high, proving that demand will still be there and students will still be keeping the market extremely affluent. 

Through all of this it was found that the sector had changed from an investment perspective and that it was now seen as a safe place to invest. In previous years those who opted to invest in student property were private investors but now institutions are looking to be a part of it.

These investors used to have more of an interest in UK property investments that could work for them in the long term but their thinking has completely changed and they are now beginning to move to the student property market, it is this movement that has changed the way in which the sector is perceived.

The average return for student property is around 6% which is a good yield and one of the best available but how will the student property market look in the future as it becomes more popular with investors?

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Student property