UK property market gets a boost from student accommodation

CBRE, a world leading real estate advisor recently released a report that stated £863 million was invested into student accommodation in 2011.This figure represents a significant increase compared with 2010 which saw £770 million invested into student accommodation and a staggering 220% increase on the amount invested in 2009.

The considerable demand for student accommodation amongst property investors has been driven primarily by a low supply and high rental returns relative to standard UK property.

The head of residential research at CBRE, Jennet Siebrits said “Student accommodation is more attractive than many other asset classes in the current climate and we have seen increasing interest from relatively new parties seeking to diversify their portfolios.”

New parties include a growing number of overseas investors who see the UK as a safe and stable market place where they can obtain student accommodation for as little as £50,000 and gain high NET rental yields of between 7 – 9 %.

The report also highlighted that student accommodation occupancy rates in the UK currently stand at 99%. This incredibly high demand for student housing amongst students has seen annual student rents increase by 4% across the country and 5% in London.

Knight Frank, a prominent industry expert also reported on the changing face of the student accommodation market. They identified that the growing number of overseas students, mature students and wealthy students would create further demand for the higher quality tier of the market over the next few years.