No sign of slowdown in UK student property market

Client: Robinson Francis Low

Once upon a time, students lived in the cheapest and grottiest shared houses a city had to offer. First-year students had it even worse, traditionally confined to bog-standard, barrack-like halls of residence tucked away on the edge of campus. But in recent years, the way in which students live, and what they have come to expect from their housing has changed beyond recognition. Universities and investors are behind a wave of more modern accommodation, as they attempt to attract students with high-end living facilities. Today, students can take advantage of fully furnished studio apartments, built to a high specification – with many including onsite gyms, cinema rooms, games areas and cafes. These luxury properties also feature within a central, convenient and cosmopolitan location – making them even more desirable. This decided shift in the student housing market has been reflected by remarkable interest from investors, both in the UK and around the world.

Consistent market In the last five years, student accommodation has outperformed all other traditional property assets and has been the strongest growing investment property market in the UK. It has also continued to be one of the most resilient investment sectors, with rental incomes and property values remaining stable, or increasing. The attraction of the student accommodation sector has been driven by several factors, such as structural undersupply and positive rental growth year on, despite the economic downturn. Rising number of students Today, the student housing market has moved from a niche investment market into the mainstream And with more students than ever before applying for university, this is a market that is growing quarter on quarter.

Last year, the cap for students was lifted, which in turn led to more applications being accepted. The UK government has predicted that by lifting the cap they will see a rise of 60,000+ more students per year.

Investors are also keen to jump on the student property bandwagon as studies have shown that students are increasingly willing to pay higher rents for accommodation of modern standards suited to student needs and desires - especially in bigger cities.

Overseas investors

What's more, the UK student property market is not only serving as an overly attractive option for UK based investors, but also with investors the world over.

A leading factor behind overseas interest is that the student market within the UK is a relatively unique one which boasts leading institutions that attract students (many of whom are backed by affluent parents). Coupled with excellent development standards and one of the strongest economic outlooks in the world, it’s easy to see why this is an investment market that’s attracting interest from investors around the world.