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Demand for Purpose Built Student Accommodation to Rise

Demand for purpose-built student accommodation (PBSA) in the UK, like One Islington – the latest student accommodation project in our portfolio – is set to rise. Find out more about One Islington from us.

Savills reported a 17%  increase in student accommodation investment in the UK this year, and expects investments in the sector  to reach £5.3bn by the end of the year, surpassing the £4.5bn spent in 2016. Meanwhile, Knight Frank’s UK Student Housing Rental Update reports that headline rental growth for the sector increased by 2.55% for the 2017/18 academic year.

Demand for Purpose-built Student Accommodation (PBSA) or UK Student Property is expected to rise as students continue to flock to the UK to study. Unlike residential property, this sector is seen to be a rock-solid investment in the face of global and domestic challenges.

Savills reported a 17%  increase in student accommodation investment in the UK this year, and expects investments in the sector  to reach £5.3bn by the end of the year, surpassing the £4.5bn spent in 2016. Meanwhile, Knight Frank’s UK Student Housing Rental Update reports that headline rental growth for the sector increased by 2.55% for the 2017/18 academic year.

While some of the younger UK population prefer to seek apprenticeships instead of applying for university, the latest analysis by the Universities and Colleges Admissions Service (UCAS) shows that demand for higher education among 18-year-olds remains strong. In addition, the Government’s removal of the student cap will continue to see an increasing number of international students applying to study in Britain. In the 2017/18 academic year, non-EU applications had risen by 2.2% even while EU applications had fallen ostensibly due to Brexit.

The provision of good quality student accommodation was traditionally the responsibility of universities, but in recent years, most new accommodation has been provided by private investors and developers.

International students can be very profitable for landlords and letting agents, as many are prepared to pay higher rents for superior quality accommodation.

David Feeney, Head of Student Analytics at Cushman & Wakefield said: “More students than ever are demanding a bed in purpose-built accommodation. This, coupled with pressure on local housing markets, means that demand for purpose-built accommodation should remain strong. However, micro-market knowledge is essential to investment success.”

Mike Mitchell, Partner in Cushman & Wakefield’s Student and Residential Investment team, commented: “Across the UK, the PBSA market continues to be one of the most attractive asset classes in real estate for investors. Despite applications to Universities falling by 3.7%, the sector has witnessed year-on-year rental growth. Due to the value of foreign currencies against the Pound, there has been an influx of capital from overseas buyers in 2017 who are now competing with UK purchasers.”

The UK overtook the US as the largest student property market for the first time in 2015 after reaching a record £6.56bn in investment volumes.

Article by Ian Choong

CSI Properties (Cornerstone International) proudly markets international investment property with high yields at low risk. Our portfolio comprises residential and purpose-built student property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc); Australia (Melbourne, Perth, Brisbane) and Thailand (Bangkok). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts and due diligence. 

Disclaimer: CSI Properties does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

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