Student property the best performing asset class in UK property
Investors of UK student accommodation are set to enjoy yet another year of strong returns according to the latest report in the Sunday Times. As part of an article reviewing the best performing asset classes within the UK’s property market, The Sunday Times ranked student accommodation at the top with average returns of 13.5% last year. This vastly outperformed the growth seen in the standard housing market which saw values fall by 1.3% on average.
While returns generated by student accommodation are forecast to decrease this year due to the increase in tuition fees this autumn, experts still expect returns of at least 12%; still far ahead of the rest of the market. Industry analysts say this is because of the increasing number of foreign students entering coming to the UK for university education. The Sunday Times said this is because ‘overseas students have a different fees scale and are less effected by the changes’.
James Pullan, head of student housing at Knight Frank added, “International students prefer purpose-built blocks to the traditional housing available in the wider letting market because they can view and book them online, they are well maintained and services such as free wifi are included.”
Industry experts also commented on how the changing face of university education in the UK will affect the student accommodation market. Knight Frank’s student housing report 2011 highlighted the increasing proportion of mature students, overseas students and wealthy students that will be attending UK universities over the next few years. This will lead to a drop in demand for lower quality student accommodation and significantly push up the demand high quality accommodation which is currently in low supply in this sector.
Source: The Sunday Times