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“Student accommodation is regarded by professional investors as a serious and lucrative asset class” says the Mail on Sunday – and we agree!
September 12, 2012Article by Ray Withers
For those of you who might have missed the positive article in Mail on Sunday over the weekend about the merits of buying student accommodation I wanted to expand further on a few reasons why we have believed for the past 3 years now, why it’s such as superb asset class to invest in.
The weather has turned, there’s a chill in the air and it’s now that time of year when universities are just about to start their new intake of undergraduates. According to UCAS the total number of accepted applicants to UK universities is around 450,000 for 2012-13.
There is indeed a reduction in total applicants but the growth in wealthy international students is keeping the UK university sector one of the strongest in the world with the BBC reporting that in a global league table of the most attractive universities, four of the top ten are UK universities.
And it is this influx of international students which is also propelling the student accommodation sector, as journalist Richard Dyson remarked in his article in the Mail on Sunday,
“This pool of global ‘travelling students’ is predicted to double to eight million by 2025, with Britain set to attract more even than the US, according to the British Council. These students need to live somewhere – and can pay”.
According to Knight Frank’s latest student report, the top three locations for student investment returns are London, Kingston, and Brighton. This is why I place great faith in our Brighton project to deliver real returns for our investors. Property in and around London remains considerably more expensive than other parts of the country thus creating barriers for entry.
For a relatively small city, two well-known universities mean that Brighton has a very high concentration of students – 34,000 in a population of 250,000 – some 13%. Brighton University alone accepts around 3,000 international students per year.
With little choice for proper purpose built student accommodation, Brighton has been crying out for a development like The Regency. The area is restricted in its growth due to geographical and planning constraints so this is a rare opportunity.
Students in Brighton love it as a university city with the beach and a great social scene; they just need better quality accommodation, as Dyson remarks:
“Fewer students today live in the kind of grotty conversions that featured in the Seventies hit sitcom Rising Damp with seedy landlord Rigsby and more live in new, purpose-built complexes, some of which are positively luxurious.”
The Regency offers great quality luxury accommodation exactly where it is most needed – 77% of students in Brighton have to find alternative accommodation usually by living at home or in the private rented sector.
The article also mentions the importance of competent management to ensure that, “student accommodation is a genuine ‘armchair’ investment, involving little ongoing oversight on the owner’s part”. With this in mind, we have partnered with the highly reputable CRM Students with 15 years’ experience taking care of everything for the investor.
Reading this article in the Mail on Sunday at home, over breakfast I was delighted to see that the belief that we at Property Frontiers have placed in student accommodation as an asset class over the past few years is being recognized and supported by expert property journalists such as Richard Dyson.
And I certainly agree with his words of wisdom of not being “tempted by adverts from small or inexperienced developers…. [or believing] claims made by property marketing firms without checking” and not to “put money into schemes not yet built unless the developer has an impeccable, lengthy record” – these echo our core principles of insight and integrity which will adhere to on all our investment opportunities.