Click here to Every year there are a new batch of students enrolling and being accepted to a UK university. Since the cap on number of students accepted on each course has been ditched, there has been a slow rise in the number of UK students. Despite the tuition fee increase and uncertainty of Brexit, these numbers are hitting a record high year-on-year. Many of those students are UK residents themselves, however there has also been an increase of EU and international students.
The UK has world-renowned red brick universities that attract many students. The high number comes with a greater demand for student housing, especially for overseas students who are willing to spend a bit more on rent if it means it will enhance their university experience.
On top of this, there is a housing shortage which makes the demand even higher for residential property. With new purpose-built accommodation made for students, it reduces the steep demand for homes and leaves residential housing for families that need it.
For investors, this high demand and low supply is a goldmine, giving high yields as well as a steady income.
Why Is Purpose-Built Student Accommodation The Way Forward?
1. Students are looking for luxury
The modern student has different expectations. If it were 20 years ago, university life would consist of the typical university campus dorm or a shared house with a small box room. Today, students are attracted to more high specification accommodation. A PBSA is exactly what a student needs, providing each room with a kitchen and bathroom. There are also gyms, study rooms, common rooms and even cinema rooms that students can enjoy in house.
2. Universities can’t keep up
There is only so much room on the university campus. With thousands of new students a year, universities just can’t satisfy the demand for accommodation. This has resulted in more PBSA developments. In 2017 alone, there were 25,000 PBSA bedrooms built and 14,000 still under construction. The demand isn’t forecast to be met for another several years.
3. It is convenient for students
A PBSA is not just about the interior, the location is also taken into consideration. PBSA developments are constructed close to the city’s universities and are also within walking distance of the town centre, where students can go shopping, eat out and enjoy nightlife. There are also transport links, which many investors see as valuable, making the rent good value for money.
Summary - What Does This Mean For Investors?
As a property investor, you should consider the view of the tenant; is this a place students would want to live?
For many students, a PBSA is ideal and that is why it is such a lucrative market – the demand is high! Savvy investors who seize the opportunity of investing in areas that aren’t over-saturated will find themselves receiving high NET yields of up to 9%. That is much greater than buy-to-let yields which average at 4-6% in large cities like London.