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Student housing: 98% tenancy rates and 9% assured yields in 2013

Attractive returns, 98% tenancy rates and rising demand from affluent overseas students are boosting investor interest in student accommodation.

With exceptionally high tenancy rates, rising demand and attractive returns, investors are increasingly turning to student accommodation.

Student housing offered sustainable and assured yields of 7-9% net in 2013, according to Go Global Investments, although the CBRE Student Accommodation Index (Dec 2013) showed returns of up to 9.95% in the 12 months to September 2013.

The figures are higher than returns for office, industrial and retail property for the same period, according to performance analysts Investment Property Databank (IPD).

Peter McDermott, Director of UK-based Go Global Investments, suggested that landlords are increasingly viewing student accommodation as a “low risk” investment.

He said: “Student accommodation now has a proven track record and its success is underpinned by exceptionally high tenancy rates of 98% plus, alongside a chronic undersupply of dedicated housing in most top university cities across the UK.”

Student property supply is struggling to meet the rising demand fuelled by ever-growing numbers of often affluent international students; indeed, UCAS applications from outside of Europe have witnessed annual growth of 8.5% between 2007 and 2013.

Mr McDermott also described the student housing sector as “recession-resistant” since the tough jobs market stemming from the economic downturn saw young people postponing their careers in favour of gaining more qualifications.

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