Uk Student Accommodation Investment Market Driven By Overseas Investors

UK Student Accommodation Investment Market Driven By Overseas Investors

by

Luke Fitzy

The United Kingdom property market is widely considered a \’safe haven\’ by many wealthy foreign investors, due to the solid property ownership laws and the prestige of owning a property in the United Kingdom.

It is interesting to note that out of the many UK property investment opportunities student accommodation has emerged as a top choice with foreign investors seeking security, high occupancy and good yields.

Another factor why foreign investors are keen on UK student accommodation investment is due to the fact that they know the importance of a good education and that a lot of students from their own countries attend Universities in the UK.

The United Kingdom attracts the highest amount of foreign students than any other country in the world, apart from Australia. The UK is anticipating an increase of 30,000 foreign students enrolling on UK university courses by 2020, the only country with more than that number is Australia with 50,000. Source ukcisa.org.uk

The largest group of foreign students studying in the UK are from non-EU countries, Total non-UK EU students was 130,115 compared to 298,110 non-EU students for the 2010 – 11 academic year. Source ukcisa.org.uk UK Council for International Student affairs

The non-EU countries with the most number of students studying in the UK are China 67,325, India 39,090, and Nigeria, with 17,585, followed by the USA, Malaysia and Hong Kong with 15,555, 13,900, and 10,440 respectively. Other countries listed include Saudi Arabia, Pakistan, Thailand, and Canada. Interestingly we can see the majority of students are coming to the UK from Asia. These numbers are rising; Data released by UCAS regarding the 2012 January 15th deadline showed that there has been a 13.7% rise in applications from Non-EU overseas students.

According to Knight Frank the UK is in a strong position to reinforce its place as one of the world\’s leading study destinations, especially when it has 5 of the top twenty universities in the world. \”A UK university education continues to be held in high esteem around the world and this demand is set to expand exponentially in line with global wealth generation.\” – Knight Frank, Student Property Report 2011

Wealthy Overseas Investors

Students from Non-EU countries studying in the UK tend to be from the more affluent families as generally compared to their own countries the education and the cost of living in the UK is very expensive.

That said it is also the wealthy families which are more likely to be investors and more so the higher net worth investors who have sufficient funds to invest overseas. So it would make sense for them to consider investing where their family members and or friends are studying.

This is reflected in the fact that the customer base for new purpose built student accommodation in the United Kingdom includes a very high amount of foreign students.

Jerald Solis BMD for Experience International, one of the leaders in UK Student property investment market commented.

\”An increasing number of foreign investors from Asian counties including China, Hong Kong, Singapore, Malaysia, and India our investing in our UK student property investment opportunities. This might be partly due to the fact that many of the projects we have sold and currently sell are likely to accommodate a large number of resident students from Asia \”

Experience International currently offer student rooms for sale in purpose built developments in Liverpool, London, and Bournemouth all of which provide investors around 10% NET rental yields a year.

Strong Asset Class

The popularity of student property with investors is driven by dependable occupancy levels of 99% or higher. The strong demand for purpose-build student accommodation underpins rental growth with a total increase of 34% recorded between 2005 and 2010. Source: UCAS

Student property is a strong performing asset class and some would say almost unbeatable in terms of rental returns as occupancy is very near 100% and Net yields are generally around 10%.

Also experts would say that student accommodation investment is recession proof. As long as there are universities their will be students that need accommodation and during recessions many people choose to go back to university to improve their career and employment chances, people simply use student loans and grants to fund the expense.

\”Student Room Investment outperformed every other commercial property class and delivered consistent returns throughout the economic downturn,\” James Pullan, Head of Student Property at Knight Frank commented.

Summary

The research has indicated that as an increasing number of overseas students are studying in the UK so are foreign investors from the same countries buying into the United Kingdom\’s student property market.

These investors are attracted by the prestige of UK Higher Education and owning property in the United Kingdom in general. Along with the high occupancy levels and in turn strong rental income that are being provided by specialist purpose built student accommodation projects alongside the security provided by UK property law.

Therefore we can see that the UK student property investment market is in fact partly being influenced by both overseas students and investors.

Copyright (c) 2012 Experience International

Luke has been working with property investment markets for the past 8 years and has written many articles about the various markets around the world. Right now

student property investment

in the UK is a hot topic with many international investors acquiring units. The research has indicated that that this trend of student property investment in the UK is set to continue for the foreseeable future.

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