investor appetite grows for student accommodation investment
News Posted On: 25 May 2011
If the property market in the UK, and the rest of the world for that matter, was nice and straight forward to anticipate and predict, we’d all be property tycoons and enjoying the fruits of our labour at this very moment.
Sadly, the truth is that it is very rare that the market gives away any indication of potential success in the future, and it is up to the experts and ecomonists to work out how and where investors should invest their money. Interestingly however, sometimes there is a mad rush in demand for certain property types, and currently a student accommodation investment is experiencing this rush.
Why? Well, on closer inspection in this particular property arena, it is because the burden of mortgages and the risk of an interest rate change have both been eradicated.
Graham Flaherty specialises in student accommodation investment, and he explains that the low price of attractive student housing, along with the fact that demand has risen because universities are growing at a fast rate, have contributed to this newly developed interest.
Flaherty explains: “In student-heavy cities like Liverpool, student lets are achieving 10% net yields, which is higher than residential property investments.”
And it should be noted that interest in housing tomorrow’s graduates is not only being generate from the UK, there is demand from across Europe too, potentially indicating that this is a low cost high demand property proposition that is unlikely to wait around.
European investors may well have noticed a shift in approach to higher education within the UK, with rows over tuition fees and entry criteria proving that there is a greater business angle within this sector today, more so than ever before.
"Generating a higher education institution that appeals to students in the UK as well as abroad has become a priority for universities today. This has led to the banishing of traditional views around typical student accommodation,” adds Flaherty.
With residential property a low cost goes hand-in-hand with low demand, but this is not the case in student lets, he adds, as units can be purchased from only £30,000 cash.
As usual there has to be some sort of drawback, and even the brightest and most optimistic of investors should acknowledge that there are elements of uncertainty with student let investing. Above all the cost of attending university is rising, which has the potential to prevent a chunk of the population from attending altogether, and if student numbers diminish, so too does the demand for accommodation.
For now, however, it seems that demand is up, risk is low, and so too are costs, and investors both in the UK and Europe are showing interest in what could only be a very small window of opportunity.
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