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CBRE: £2 billion invested in the student property market this year

Higher than average rental returns are continually making the sector an attractive investment choice.

In summary:

  • Investment has reached £2bn since the start of the year
  • 5 deals worth £100m have taken place
  • Investment has increased by 145%

The student property market has seen a lot of positivity this year with increased investment, strong demand and changed student perceptions.

A number of quarterly reports from various sources have reported increased student demand and in some cases double the investment in the sector when compared to last year. The latest data from CBRE states that in the UK, investment into student property has risen to £2 billion since the start of the year. This equates to an increase of 145 percent for the first nine months of 2012 when compared to the same period of 2011 which is unsurprising since investment into student property had almost doubled by the end of the second quarter.

The past 15 months have seen five deals over 15 months take place that were worth over £100 million however, no transaction had been more than £85 million until the third quarter of last year highlighting the surge in interest in this well-performing market.

The student property market tends to fare better for investors due to the impressive rental returns, which tend to be better than those in the domestic buy-to-let market, and the fact that investors are now more aware of this could be an indication as to why there has been increased investment in the sector.

Jo Winchester, Head of Student Advisory, CBRE, said: “Total returns remains a key driver for investors, as they flock towards the impressive returns given by student accommodation for a second year in a row.”

The CBRE reported highlighted that in the year to September 2012, rental returns in the student property sector averaged at around 9.6 percent where commercially, offices averaged at 5.4 percent and retail units 2.2 percent.

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