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January 13, 2010Article by Ray Withers

Since the turn of the year I have spent a great deal of time researching the student accommodation market. I have read loads of articles and collated many links, so I thought I would summarise the interesting bits and if you wanted to read the articles for yourself, they are well worth reading so please do.

Many of the national newspapers and indeed most of the property investment magazines and websites ran features on where was the best place to invest in 2010 and the decade ahead. (You can see my own thoughts here) The Daily Telegraph looked to usher in a new era of property investing by looking at what the next decade may bring and in particular the coming year would hold for property investment in the UK.  Pointing to a report published by Knight Frank on  student accommodation in 2010, the newspaper states that 2010 will see investors in student accommodation as a winning choice.

In further news published in PlaceNorthWest. Bramer estates, the property asset management firm of Braemer Group, has recently been appointed property manager of a 173-Unit block in the heart of Birmingham. Neil Roberts, managing director of Bramer Estates said “We are pleased to have secured this new instruction at Masshouse Plaza… The building enjoys very high occupancy levels, mainly from the student market.” The article goes on to say that student numbers are expected t0 increase by over 28% in 2014.

Focusing our attention to Liverpool, rental growth in the student accommodation sector has seen the highest increase in Liverpool, rising by 13% over the last academic year alone, this compares to an already healthy 5% average growth rate for the UK as a whole. In fact compared to the rest of the UK commercial sector which grew at only 0.6% over the past 6 years it speaks volumes about this maturing asset class. To read more on the North West student accommodation then please visit here, you will have to register your details to read there articles but it is free to do so and well worth it!

Unite who are one of the big 4 large service providers of student accommodation in the UK and operate a fund which includes 20,000 beds have just had it valued at over £1 billion. In the 12 months to December 2009, the value of the property portfolio held throughout the year increased by 1.1% and rents grew by 8.4% over the same period. Educational Investor carries the full story.

The FT carried an article just yesterday on the Mansion Group’s decision to launch an open-ended student accommodation fund for the retail market. The fund has already made it’s first foray into student halls with a purchase in Liverpool. Mark Stubbs, business development director of Mansion Group, said: “When we were first considering student accommodation we were immediately struck by the investment potential… As an asset class it is possibly best placed to endure the economic downturn affecting other property classed such as retail and commercial, largely because of the ever-increasing numbers of students heading into higher education, both from at home and abroad.”

Also I recommend checking out this link to see the performance of the Braemer UK Student Accommodation Cell over the past year compared to European property as a whole. Finally, as mentioned above,  Knight Frank published a report on Student Accommodation in 2010, it is a couple of pages long so  I will list the main bullet points below but suffice to say it is all positive news coming from one of the most long established and respected consulting services in global real estate.

  • Rental growth in the student accommodation sector remains robust, recording growth of 5% per annum over the last six years, compared to 0.6% for commercial property. Substantially higher growth was achieved in key university towns over the last academic year.
  • Demand for university places continues to rise. Preliminary figures suggest a further increase in demand for places in the 2010/11 academic year, with UCAS reporting a 12% rise in applications at its October deadline.
  • As an asset class, the student accommodation sector is maturing and becoming recognised as an important element of the wider property investment market. Since mid 2009, there been increased demand for secure income producing assets and demonstrable yield compression.

The question I want to ask is: Did you stay in student accommodation at University and what was it like?

Many thanks for reading,

Christopher

Written by: Christopher Chadd

Author

Ray Withers

Ray has over 17 years’ experience in the international property market and bought his own first international property investment back in 2002. Aside from running Property Frontiers, Ray has been involved in residential, hotel, student and commercial property investment and development in both the UK and overseas and co-wrote "Where to Buy Property Abroad - An Investor's Guide". As Founder and Trustee of the Frontiers Foundation, Ray is directly involved with many of its projects to ensure they have a direct and tangible impact in individual communities across the globe. He is passionate about property, travelling, scouting out new opportunities and finding time to spend with his young family.
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