UK student property investment growing, latest figures show

Investment into the UK’s student housing market hit £3.98 billion in the first half of 2015, well ahead of the £2.35 billion for the whole of 2014, the latest data shows.

Within that total, London saw a record £1.98 billion of transactions across the first half of the year, according to research from commercial property and real estate services advisor CBRE.
The firm said that these numbers come as many investors begin to see the student accommodation market as a higher yielding way of gaining exposure to London’s PRS, with yields at an attractive margin above conventional residential stock.
It adds that the record inflows seen in London have caused the fastest change in student housing yields in the whole of the UK, with yields now at 4.75% on a par with the previous peak in 2007.

Student housing supply remains constrained across the UK, as a growing number of students chase a severely limited stock of purpose built accommodation in most university towns, according to Jo Winchester, head of student housing advisory at CBRE.

‘So long as demand outstrips supply, upward pressure on both rents and capital values will continue to make the market an attractive proposition for investors, and we don't expect the market to come off the boil for some time,’ explained Winchester.

She added that some investors see student housing as a more cost effective way of gaining access to the PRS, both in terms of higher yields and lower capital values per square foot.

‘Although there are differences between residential and student accommodation operational models, some larger student housing operators and investors in the sector are beginning to explore build to let development and investing in the PRS. As this happens, it is possible that the operational models could become more closely aligned,’ she concluded.