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Student Housing Investment, What Is It Like?

January 15, 2010Article by Ray Withers

Student housing is, in some ways comparable to an apartment-hotel type investment, in that, it is an investment you can enter into with a clear understanding of what to expect from your investment.

In an apartment-hotel investment you know that you will get free use of the property you own for a pre-determined amount of time every year, and that, for the rest of the year the hotel management will take care of your room, that it will be let out to tourists and holiday makers, and that their brand power will maximise the rental income from your unit, from which they will pay you the capped or the uncapped amount they have guaranteed.

Unfortunately, while similar, student housing investment is much less warm and cosy, you won’t get (or probably want) holiday usage, and there will be much less chance of a guaranteed rental yield, but apart from that it is similar: you know exactly who your unit will be let to, and exactly how much it will be let for, but in this case you will be relying on the universities in the area to maximise your rental income.

David Cox, director of international property investment consultancy Property Frontiers, which has been researching the buy to let potential of student housing for some time, disagrees on the apart-hotel analogy, and instead compares it to Berlin property investment, he said:

“Student housing investment is less like apart-hotel investment, and much more like investing in Berlin property, in that the level of demand is near constant and very reliable. In Berlin a high percentage of the population live in rented accommodation, and at Uni all students live in rented accommodation. The appeal of having a room or a flat off campus is anyone’s guess I’m sure.

“None the less the appeal is unquestionable. We have just taken some student rooms for sale in Liverpool, which have had 100% occupancy year in year out for the last 12 years. The complex is within walking distance of two Liverpool universities. The price is lower than in 2007, and as a result the yield a lot higher. With tenants already in place on target yields are 10%.”

The development in question is Beacon House, offering student rooms for sale in the form of studio apartments from £38,000. Looking at the images, the decor of the rooms is surprisingly nice, which goes some way to explaining the 100% occupancy record they hold.

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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