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Student property investment continues record-breaking year

Student property investment continues record-breaking year

Investors are set to spend nearly £6 billion on student property this year, making it a must-have mainstream asset class.

Summary:

  • Student property investment will total almost £6 billion before the end of 2015
  • It is the UK’s new portfolio priority and investment levels recorded a 126% year-on-year increase in the second quarter
  • Are you one of the millions of investors planning to add student property to your portfolio this year?

New figures have confirmed student property investment as the UK’s must-have asset class.

According to independent property consultancy Jones Lange LaSalle (JLL), nearly £6 billion is set to be spent by investors on student accommodation before the end of 2015.

The second quarter of 2015 saw £1.6 billion invested, which represents a 126% year-on-year increase.

Philip Hillman, Chairman of the Alternatives Group at JLL, said: “We have seen significant investment in UK student housing so far this year, with particularly strong interest from Russian, Canadian and US investors. This is a trend we expect to continue as we push into the second half of the year.

“As the alternatives sector becomes increasingly mainstream, the liquidity in the market and increasing variety of investors with diverse underwriting approaches to the sector dynamics continues to drive investment.”

Underpinning the investment potential of the sector is a critical undersupply of dedicated accommodation. Demand for British university places continues to increase – UCAS has just reported a 2% applications rise compared to May 2014 – but the vast majority of students are still forced to live in old-fashioned houses of multiple occupancy.

This means that dedicated purpose-built accommodation demands a rental premium across the student market and offers investors rental yields that are around 50% higher than standard residential buy-to-let investments.

JLL’s figures follow news from Savills that stated £4.2 billion had been spent by investors on the asset in the sector in the first six months of 2015.

Vita Student is Select Property Group’s market-leading student accommodation brand, offering investors 7% returns assured for five years, across six operational residences.

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