Student housing turns to gold for investors
Tuesday, 7 August 2012 10:47 AM
The housing market may be flat but one part of it is booming: homes for students.
Research by property firm CBRE has found that student housing attracted almost £800m of investment in the first half of 2012. That is more than double the £375m invested in the same period last year.
The boom came despite the introduction of higher tuition fees for 2012/13. CBRE says the UK higher education system remains heavily over-subscribed and that the development of student housing has not kept pace with the growth in student numbers.
With occupancy rates reported at 99 per cent or more and a lack of supply in the private rented sector, rents are expected to rise in most university cities at least in line with inflation.
CBRE says investment funds continue to prefer student accommodation projects with long leases but are also increasingly looking at forward funding deals.
Although some of the main student housing lenders have looked to reduce their weighting in the sector, insurance companies are entering the market attracted by low-risk income streams.
Universities accepted at total of 492,000 students in 2011, an increase of 35,000 or eight per cent on 2011. However, the number of student halls has not increased at the same rate and nationally there are 155,000 more students living in the private rented sector than in 2007.
Jo Winchester, head of student housing advisory at CBRE, said: ““There is no shortage of investor demand, but the market is hampered by a shortage of new high quality development opportunities.
"Proposed changes to the REIT regime, together with the significant increase in the number of new operators in the last four years could widen opportunities for indirect investors by creating a greater choice of investment funds, as well as creating an alternative exit position for established operators.”
Want to be the first to know when we break a story? Follow @AboutProperty on Twitter and subscribe to our free weekly newsletter.
