The UK property market is known the world over for its robust qualities. Even in the face of political tumult, the boom and bust cycle and stock market nosedives, the trust with which British bricks and mortar is regarded is unusual in its strength and longevity. It represents the most stable, secure and profitable asset class available the world over.
The UK’s student property market is an offshoot of the bigger property market picture which has come on in incredible leaps and bounds in the last few years. A perfect storm of factors in the UK have combined to make student property investment the most lucrative form of investment around.
The UK’s student numbers are higher than ever. Due to government-led initiatives in recent years, access to higher education has been made more readily available to demographics that may not have had such an opportunity even just a generation ago.
During the 2016/17 academic year, upward of 2.3 million students were enrolled in higher education institutes across the UK. Many of those are comprised of non-UK students. A total of 6% are from countries in the European Union while an impressive 13% flock to the UK from the rest of the world.
The UK’s universities are a byword for the consistency of high standards and good results, and the appeal of higher education to an ever-growing number of students, both undergraduates and postgraduates, is self-evident.
For student property investors, big student numbers mean big returns. Demand for student property across the UK is at an all-time high; it’s a demand that far exceeds supply. As developers do their utmost to keep up with the clamour, new builds that are finished and made available are immediately snapped up by droves of potential, would-be tenants.
The needs and wants of students have changed drastically in the last few years. The days of the traditional student ‘digs’ are long gone. Living like the Young Ones is not something the modern student finds particularly appealing.
Who can blame them? Leading property firms such as RW Invest find their high end, luxury student accommodation developments to be the subject of increased demand from investors who are savvy to the potential of student property.
Students today look for their accommodation to provide them with a little more than all mod cons. High-speed broadband, on-site gyms, car parking spaces, privacy, security and stringent site management are high on the list of priorities. The rapid rise of international student numbers in the UK means that with more and more young people coming to the country from further afield, they do not want to be short changed on a property that may well be their home for at least three years.
With the universities finding themselves unable to afford such amenities and luxuries for their own student dormitories and shared spaces, the gap in the market has been quickly filled by the private sector. It really is a buyers’ market, and developers and property investors are in prime position to take advantage of public sector indecision.
In parts of the country such as Liverpool and Manchester, investors will discover that with an outlay of 70% less than they would be expected to put down in London, incredible returns and rental yields can be gleaned from the market.
Indeed, it’s in Liverpool where the best potential returns can be found in areas that experience high student population density. L7, a postcode that constitutes Edge Hill, Fairfield, Kensington and parts of the city centre, is the top student rental yield hotspot in the country. Offering returns at an incredible average of 11.79%, the area is a haven for students both domestic and overseas. The average entry cost for investors stands at £118,225; a figure well below the national average property asking price.
Manchester’s M14 postcode, covering two university campuses in the city, is another of the country’s best performing student rental yield areas. At 10.08%, investors will find another surfeit of potential tenants and returns that are very rarely matched in other sectors and industries.
The state of play is obvious: the UK’s student property market is the most lucrative and secure form of investment around. The market shows no signs of slowing down, and investors can find themselves on the first rung of the ladder with a lot less outlay than they expected.