This has been catalysed by a variety of factors, namely – an unwavering thirst for higher education, increased international student mobility, a high regard for UK universities and a shortage of quality accommodation.
Such is the strength of the purpose-built student accommodation (PBSA) sector, in particular, that 10% NET Guaranteed Income for 10 years has been offered to investors by one leading property agent, Emerging Property Ltd. This is in comparison to a figure closer to 5% for traditional buy-to-let student houses.
How Are Double-Digit Yields Possible?
The company delivering such attractive returns is doing so through the use of an established business model, based around handpicked investment cities and development sites.
These are selected by conducting thorough research into elements of demand, such as the current provision of accommodation, growth prospects of the University(s), and the proximity of the sites to the campus and other key amenities, such as transport.
By identifying such prime locations ahead of time, the experienced developer is able to secure attractive land purchase prices – the benefits of which are then passed onto individual unit investors in the form of below market value purchase levels.
Such investments benefit from positive economies of scale with regards to the purchase of land, furnishings and management, among other things, and this further contributes to the size of the yields on offer.
A Sustainable Approach
This model not only brings about short-term profits, but also provides a robust long-term income stream. This is due, in part, to the current accommodation supply gaps, growth in university populations and the quality of onsite management companies.
For more information – and to see the full-sized infographic, visit www.emergingproperty.co.uk