The UK student property market has gone from strength to strength in recent years, and its ever-changing landscape is certainly an interesting one to watch.
One of the most notable trends has been the gradual shift away from the traditional dominance of London and south east England, towards regional towns and cities across the country – many of which are undergoing impressive regeneration efforts and attracting students and investors alike.
This has opened up some exciting new opportunities for investors, particularly those who are on the lookout for compelling alternatives to the capital. At the same time, the rise of PBSA (purpose-built student accommodation) means there has never been more choice for investors keen to delve into the student property market.
Below I reveal the five UK cities that offer promising student property investment opportunities.
In recent years, Cardiff has emerged as one of the more promising UK cities for student property investment. Not only does the city boast three universities and a student population of 43,000, it is also responsible for driving nationwide house price growth. Indeed, distinct sluggishness in London and the south in recent years has been offset by ongoing growth in cities like Cardiff; the Welsh capital saw 4.1% year-on-year price growth in August 2019.
The city has another incredibly attractive quality: low entry prices. Property buyers can secure a home in Cardiff for an average of £211,800, almost half that of London (which stands at approximately £483,800).
This creates huge potential for income generation, particularly within the student housing sector, considering the increasingly vocal demand from the city’s growing student population. As it stands, more than half of people studying in Cardiff can’t access PBSA and are instead forced to rely on HMOs; residential properties, which have been converted to accommodate students. However, many of these have fallen below licensing standards.
This highlights the urgent need for quality student accommodation, as well as the opportunities this opens up for investors to participate in delivering this supply.
Few cities offer better opportunities for student property investment than Liverpool. This city holds strong appeal for students, largely due to its culture, lifestyle, and the plentiful number of higher education institutions scattered across the city. Combined, there are roughly 70,000 students studying across Liverpool’s three universities.
Why is now a good time to invest in PBSA across the city? For one, the number of students is on the rise, thereby increasing demand for term-time accommodation that is safe, convenient and offers added amenities like on-site gyms and study spaces.
Furthermore, the city is undergoing great regeneration efforts, which is sure to attract further investment into the region. It is thought that the £1 billion investment into the Knowledge Quarter, which surrounds the universities, will bring more high-level graduate jobs in leading industries, and act as an incentive for those pursuing further education to remain in Liverpool after graduation.
Property investors should also consider Newcastle in their search for lucrative investment options. The popularity of this city as a study destination means strong demand for year-round accommodation and high occupancy levels.
Demand for PBSA does not appear to be slowing down; Newcastle’s higher education institutions have experienced a 35% increase in applications since 2008, according to figures from Knight Frank. Many of these applicants are international students, for which PBSA is a popular choice. Indeed, international students are often prepared to pay higher rents for the convenience and reassurance of all-inclusive, quality accommodation.
Strong demand for bespoke housing and the willingness of international students to pay higher rents to secure these benefits make PBSA an appealing and lucrative investment, particularly within this bustling regional city.
With four universities, as well as 14 higher education institutions and additional universities in the surrounding areas, the demand for PBSA in Manchester has never been higher. The popularity of this form of accommodation is clear: according to the Student Accommodation Survey 2018/19 by Knight Frank and UCAS, 77% of students living in privately-operated PBSA in Manchester are happy with their accommodation choice.
This combination of increasing demand for PBSA and high satisfaction levels of current residents is certainly good news for investors scoping out the market and paves the way for increased investment in the years to come.
Home to the University of Bedfordshire, the commuter town of Luton is also a promising investment opportunity. This is particularly true given the huge £1.5 billion revitalisation project currently taking place across the town centre. The University of Bedfordshire is reaping the benefits from the regeneration project, with a £46 million investment in a state-of-the-art library and the construction of a £37 million STEM building.
With the university committed to improving the student experience through investment into the campus, Luton is a great location for investors seeking to generate strong returns from the student property market.
The student population is growing in many of these cities, which means there is huge scope to plug the student accommodation gap and ensure all students have access to quality private accommodation. Naturally, investors should do their homework before deciding which town or city to pursue, however generally speaking, the student property market can be a great investment if handled with care and due diligence.
Jerald Solis, Business Development and Acquisitions Director, Experience Invest