UK student housing enjoys record year

UK student housing enjoys record year

The UK housing sector is experiencing a record year after evolving into a mainstream asset class that offers stability and strong returns.

Summary:

  • The student housing sector in the UK is growing, with total investment projected to hit £5.7 million by the end of the year
  • Popularity of student accommodation can be explained by its maturation as an asset class and stability compared to other options
  • Applications to UK universities have increased by 2.1% since 2014, with applications by international students increasing 7%

The UK student housing sector has experienced a record-breaking year, with £5.7 billion total investment projected before 2016.

More than 40,000 beds have been sold in the year to September for a total of £4.3 billion, £1 billion more than the last three years combined. With a forecast that is expected to exceed £5.7 billion by the end of 2015, the student accommodation sector has outperformed its previous high of £2.7 billion in 2012, a report by Bilfinger GVA found.

Due to the sheer activity within the sector this year, it is believed that at least a third of privately rented and purpose-built student accommodation has been up for sale. It is believed that the sector is experiencing such phenomenal growth as it matures into a mainstream asset class.

Roger Lown, Senior Director at Bilfinger GVA, said: “Student housing has had a march on some of the other alternative asset classes because institutional funds are already in the sector and they can relate to it and it’s fairly straightforward. There’s still a degree of maturing to go, but it’s much further along the line of evolution than other alternatives – and it’s a less risky than hotels and leisure but there are strong returns.”

With the total number of students expected to hit 537,717 for the upcoming academic year, the complete removal of caps on student numbers has had a direct impact on the demand for private student accommodation. Applications for places at UK universities have increased by 2.1% since 2014, with the number of applicants from overseas rising by 7%. International students increasingly look to privately rented student accommodation to provide them with home comforts and a prime location that offers them the highest quality university experience.

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