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Purpose built student property is a growing sector in the UK
with an increasing number of properties available to retail
investors.
INVESTMENTCASE
Many investors are familiar with the idea of property as an investment as they have
purchased their own homes. Purpose built student property on the other hand is a relatively
new retail investment concept, as it allows the investor to be less hands-on than with
traditional buy-to-let property.
This report will specifically focus on the purpose built student property market and the
demand for student accommodation in the UK.
DIVERSIFICATION
Student property is a relatively new asset class but is a sector that is rapidly growing and
expanding. It allows investors to spread risk in a balanced portfolio in a similar way to
traditional buy-to-let property.
STABILITY OF INCOME
Students will typically take out a 42-48 week rental contract and pay their rent either
monthly in advance or at the start of each term. Growth in rental income of 5% per annum
has been achieved since 2011 and Knight Frank predict this to continue through 2013.
PERFORMANCE
Average yields for student accommodation are relatively strong and have outperformed
residential buy-to-let and commercial returns over the last few years. Since the start of 2012
average net yields have varied from 5.5% to 7.5% across the UK.
INFLATION HEDGING
Student property has the potential to produce returns above the rate of inflation.
OTHER CONSIDERATIONS
As this is a relatively new asset class, investors need to be aware of the factors affecting
demand and the key drivers for the market. Student property can be a very complex
investment and does not yet have a proven re-sale market.
SCOPE OF REPORT
This report will provide the reader with an understanding of the UK student accommodation
market with the focus on investing in purpose built student property.
This report comprises of an investment case for student property, a detailed market update,
demand and supply of student accommodation in the UK and a detailed look at investment
activity in the student property sector.
Alongside this there is a detailed review of the retail investment opportunities in the sector,
including investment potential and future outlook. This includes a comprehensive alternative
investment register with investments that are currently available to retail investors.
The register includes 80 directly held investments, 5 investments with a corporate element
and 13 collective investment schemes.
