The student property market has shifted significantly in recent years with students turning away from houses of multiple occupation (HMOs) towards purpose-built student accommodation (PBSA). This has resulted in investors having an increased appetite to invest in this sector, attracted by the high rental yields on offer.
The industry has been heralded as being one of the strongest property markets but there has been little concrete evidence about the popularity of PBSA to date since many of the developments have been under-construction. However, in a clear demonstration of where the sector is heading, leading student property provider Vita Student has announced that all 156 studio apartments available at its Portland House residence in Exeter have been reserved three months ahead of the 2014/2015 academic year.
There are around 19,000 students in Exeter, the vast majority of which haven’t got access to university-provided accommodation meaning that the city is a strong example of the supply-and-demand problem that is facing nearly all the main university cities in the UK. With suitable student accommodation becoming a very rare commodity in the city, Vita Student’s studio apartments have been in very high demand and students have been clamouring to reserve a room.
This demand is obviously beneficial for investors savvy enough to recognise the opportunity presented by the sector, and the buyers who purchased an apartment at Portland House in Exeter will now enjoy minimum rental returns of 7% per annum.
As well as providing students with better living quarters the PBSA residences are also great news for local people as they alleviate the strain on residential housing and allow student-rented properties to be released back into the main stream sector.
Gavin Duncan, Managing Director at Vita Student Management, said: “The appetite for higher education in the UK has continued to rise over the past few years which means that the requirement for quality accommodation is greater than ever. Achieving full occupancy at Portland House in Exeter so early before the first year of operation is strong evidence of the way the market is moving.
“We’re certain that the sector will continue to mature due to students’ growing expectations of what private housing should offer. The level of demand for the studios at Portland House has been initially driven by the lack of suitable housing provision in Exeter city centre but Vita Student residences are the perfect environment for students to live and learn in so we know that many of our new residents were primarily attracted by the quality and level of service we offer.”
All the residents set to move into Portland House in September are from Exeter University, with 30% coming from the UK while the rest are from overseas – predominantly South East Asia and Europe.