Student Accommodation “Best Performing UK Property Investment Sector”

The demand for student accommodation in the UK is booming and the sector has been named as the “best performing UK property investment sector” by Knight Frank.

James Pullen, head of student property for Knight Frank, explains: “Total returns in 2010 for student accommodation in the regions outperformed all other property sectors. The student accommodation sector is now recognised as forming a critical component of a balanced investment portfolio.”

Particularly, investors are looking to specialist developers/managers such as Penlake Ltd (Middle England Developments), who have a track record in successfully developing and managing an exceptional standard of student accommodation with 100% occupancy.

Penlake’s latest and sixth development is Alexander Terrace, a listed building in Liverpool, in which Axis has an allocation of suites. Download our Prestigious Student Hall Development decision pack today and contact our portfolio managers with any questions and to reserve.

A “critical component of a balanced investment portfolio”

The Knight Frank Student Property Index is the only investment index in the sector that demonstrates investment performance of this specialist asset class. The study identified 20 top university cities across the UK and ranked them according to investment potential.

Pullen continues: “We estimate that in the next five years universities will generate £500 million through the disposal of their existing halls of residence to the private sector.”

Whilst London has the highest concentration of students in the UK, regional cities are presenting the best opportunities. Student accommodation in all of the UK regions (England and Wales) outperformed all other property asset classes in the year to December 2010, with total returns (income and capital values) of 14.65% against London’s 8.41%. Additionally, rents in regional cities rose 4.1% over the period, while London fell by -3.6%.

Record applications push up demand

The strong performance of regions is being driven by the imbalance in supply and demand. Pullen cites “record applications for university places” and says the Browne Review is expected to lead to an “application race” with students motivated to secure places before the impending rise in fees from September 2012.

Despite rising student tuition fees, UK universities have never been more popular. According to data from the Universities and Colleges Admissions Service (UCAS), demand for academic courses is at an all-time high with nearly 700,000 university applications in 2010 (210,000 more than the undergraduate places available).

13% growth in rents

Ray Withers, director of a Liverpool student accommodation agency, comments: “In Liverpool, home to three of the country’s leading universities and some 53,000 students, rents in the last academic year (2008/9 – 2009/10) increased by 13%, vastly exceeding the average 5% growth per annum seen nationally in the last six years to 2008/9.”

He continues: “Furthermore, with Liverpool’s universities expecting to attract high numbers of applicants for the next academic year (2011/12), many from overseas, this regional city presents strong demand for student accommodation and, in turn, an attractive opportunity for buy-to-let investors.”

Liverpool “most desirable” student city

Liverpool is already experiencing a multi-faceted boost to its multi-million economy, as covered in our article Liverpool’s Economy Booms and Pulls in Investors. Also voted as the “most desirable” student city, by students, the European City of Culture 2008 looks set to soar even further ahead in its popularity.

Axis currently has an allocation of student suites in the prestigious Alexander Terrace development. Suites are available to purchase now, off plan, in this listed building. There is no finder’s fee on this opportunity and you can invest for under £50,000 including all costs. Tenancy and rental income are assured at a 10.31% net yield and we project a 189% return on investment over 10 years.

Download our Prestigious Student Hall Development decision pack today and contact our portfolio managers with any questions and to reserve.

David Ball: +44(0)1273 447 307 or david@axiscontact.com

Russell Bonner: +44(0)1273 447 301 or russell@axiscontact.com

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