Rise in student numbers fuels investor demand

The number of Chinese students has surged over 50 per cent in the past five years. As student numbers from both the UK and overseas climb, 70 per cent of investors are planning to invest in student property.

The UK’s higher education institutions are undoubtedly growing in popularity with international students, registering a growth of 0.6 per cent in the past year, and taking the number of non-UK students to 388,255, according to the Higher Education Statistics Agency (HESA).

Chinese students have helped to drive demand, rising in number by 54.2 per cent in the past five years. This has been reflected in the student accommodation market too, as demand for higher quality property also increases.

“Students from China arriving to study in some of the UK’s top university cities are increasingly demanding more from their accommodation of choice, finding the benefits of having not only break-out study areas a huge draw but also extra on-site facilities such as private gyms and cinemas, allowing for maximising their efficiency and time-management,” says Heriberto Cuanalo, CEO of luxury student accommodation provide Collegiate AC.

The appeal of private student accommodation is not just rising among university applicants, though: interest among investors continues to increase, with the sector appearing in the top 10 most popular listings on TheMoveChannel.com for the past 17 months in a row.

According to Knight Frank, investment in the specialist property sector, comprising student and automotive real estate along with healthcare and hotels, is set to exceed £10 billion in 2015. 70 per cent of investors said they are planning to invest in student property and healthcare, ahead of hotels (64 per cent) and private residential property (52 per cent).

For 64 per cent of investors, the growth opportunities and long term income are the main attractions for investing in specialist property.

Mistoria Group, which offer high yielding student buy-to-lets, has seen a 65 per cent rise in investors buying student property over the last five years.

Mish Liyanage, Managing Director of Mistoria, comments: “The major driver for the rise in demand for student property is partly down to the huge growth in student numbers over the last few years.

“The other growth factors for student property is the shortage of quality accommodation, the high yields and occupancy rates. A student HMO (House in Multiple Occupation) property, can provide an 8 per cent minimum cash rental yield and a typical 13 per cent total cash yield, including 5 per cent capital appreciation.”

Regional cities are highlighted as the best hotspots for investors, with the average gross cash rental yields highest in the North West of England (13 per cent), ahead of the 6.37 per cent industry forecast for average student property yields across the UK.

“Typical rents are significantly higher for student properties, than a comparable buy-to-let property in the same city,” adds Liyanage, who forecasts a further rise in demand of 18 per cent in 2015.