Student property investments have been the UK’s strongest performing asset class, outperforming all other investment opportunities in the commercial sector for over four years. One of the key driving factors behind the high returns is simply due to the nature of student accommodation. Unlike regular residential dwellings where you may have several rooms and separate living area, kitchen, dining room, etc, all of which take up valuable space, with student properties it is far easier to fill a development with a higher number of beds within a dorm-like structure. The result is a high numbers of students (paying residents) sharing a single kitchen and communal area. These additional profits are shared among all investors meaning higher yields all round.
With the UK becoming an increasingly popular location for overseas students, combined with a lack of purpose-built accommodation to meet this increasing demand, student property has proven to be an extremely lucrative investment.
Student accommodation can often be an off-plan investment, meaning 'you' as an investor will purchase at a much lower price than the actual value of the property upon completion. From this point you are presented with two options, sell for a quick profit, or hold onto it and benefit from not just the rental income but also the appreciation as the value of the property increases further year on year, this is the popular route for savvy investors who have superior industry experience.
Like any property investment there are two elements that are important to consider when finding locations, firstly from the residents point-of-view and secondly and more importantly the investors angle, both of which combine together to make the perfect location for student property.
It is vital that the location is an area which has high demand for student property, ideally somewhere which struggles to match the yearly demand for purpose-built beds, however for investors its is also important that the area offers high rental yields. These high rental yields depend on two further factors, low entry prices and decent rental rates for the landlord/investor.
With all our factors in mind it is easy to identify the best locations with north-western cities coming out on top, with Liverpool leading the way. Manchester, Newcastle, Leeds, Sheffield and many other Cities and towns around the north-west often rank top for student property investments as we continue to see high demands in purpose built accommodation.