Despite concerns in some quarters regarding the costs of university education it seems that the UK University population is demonstrating a preference for luxury student accommodation. The Telegraph reported last week that overseas students in Central London are beating young professionals to luxury apartments at rentals of over £1000 a week. They also revealed that these now account for 29% of the tenancies of these rental properties. When investing in student property should the investor looking at the new purpose built student accommodation developments with en suite, gymnasium and other amenities
Should those looking at buying an investment property in the student market consider the more luxurious end of the spectrum of student properties?
And is the more discerning student only apparent in Central London?
It would appear not, in recent years the student accommodation market has experienced acceleration in its evolution and the demands of the modern day student are no longer met by student halls with 10 or so students sharing a bathroom. Students now expect their own room and mostly en-suite with many moving away from the old style student housing offered by HMOs. Wi-fi and fast download speeds are seen as essential for those in further education, other amenities and facilities such as a gymnasium or media room are often also on the wish list of the modern day scholar, especially of the international student.
This has lead to an opportunity for the private sector to benefit from this lucrative sector of the rental market with the expansion of PBSA’s (Purpose Built Student Accommodation). This modern accommodation is normally en-suite and is offered the form of student pods or self contained studios, the range of facilities such as gymnasiums will differ development to development but an ensuite shower room is normally standard. Students are therefore unsurprisingly favouring this new type of student accommodation above the traditional student halls and HMO stock and generally paying higher rents for the purpose built student accommodation (PBSA). These thoughts are supported by a recent Knight Frank report which suggest that the margin of the rental variation will be differ dependent on the geographical location, but conclude “rents for PBSA are up to 75% higher than HMO’s”.
Essential to any successful rental property is the management of the tenancy and purpose built student accommodation is normally operated by specialist student operators; some smaller companies which are local dealing with just once university location or national student brands that manage thousands of rooms up and down the country. These companies are well known with the student community and utilise social media to maximise occupancy and rents.
For further information about the investing in student property and opportunities within the student accommodation market please do not hesitate to contact Investment Property Consults