Photo credit: Tulane Public Relations
£2.1 billion was injected into the sector across the whole of last year, according to CBRE, as strong demand from students and high yields attracted buyers to university cities across the UK.
Indeed, 88 per cent of the sum went to regional schemes in 30 different towns and cities – a regional boom that bucks the London-centric trend of many real estate asset classes. Coventry, Swansea and Manchester are highlighted by CBRE as particular favourites among investors, providing large scale opportunities with high yields and strong rental prospects.
The figures follow repeated months on TheMoveChannel.com where student housing has dominated demand among investors, with the UK’s popularity among foreign students driving up occupancy rates and rental yields, despite tuition fees being higher than several years ago. Foreign students are not the only ones entering the market, though: investors from overseas are also filling in university applications. Foreign investors accounted for 23 per cent of total investment in the sector in 2011. In 2013, overseas money accounted for over half (52 per cent) of student property investment.
North American investors are becoming increasingly involved in the sector, notes CBRE, with companies such as Greystar, the multi-family and student housing operator, recently purchasing a portfolio of assets worth £310 million from the administrators of the collapsed Opal Group.
Jo Winchester, Head of Student Housing Advisory at, CBRE, comments: “Investor appetite for student accommodation is growing, as there is a structural undersupply across many UK towns and cities. Although changes to tuition fees and other factors created uncertainty in the letting market of 2012/13, the latest UCAS figures show that University acceptance figures for 2013/14 are now at their highest level ever.
“With an increased number of buyers, and more competitive tension around deals, we expect to see yield compression for direct let properties during 2014.”