UNITED KINGDOM
Why The UK’ s Student Property Market Holds The Key To Investment Success
BY GILES BESWICK
L
ooking at the UK property market as a whole, it’ s fair to say that it’ s a good place to put your money – whether you’ re funding your retirement or building a professional portfolio, property investment has become the go-to option for investors looking to earn an additional income stream.
Of course, the key to success lies not only in the country and location in which you choose to invest, but also the sector – it’ s essential to consider what makes a property investment resilient through macro-economic changes.
In terms of sectors, it’ s purpose-built student accommodation that truly stands out as one of the UK’ s strongest investments at the moment, for various reasons.
The country’ s universities are renowned across the globe for their quality of education, with 450,000 international students flocking there in 2016 / 17 alone. It’ s easy to see why, too – 18 of the country’ s higher education institutes are ranked inside the top 100 universities in the world and the prestige of such an education acts as invaluable currency when moving into employment.
In contrast to the UK offering some of the highest levels of university education in the world, though, the standard of traditional university accommodation has not kept up with the demands and aspirations of international students looking for a well-rounded experience.
It is this outdated supply and the rising demand for modern, purpose-built student digs that’ s made the student property market such a worthwhile place to invest and fuelled the appetite among overseas investors, particularly those hailing from South Africa.
For years, South African investors – and those from other countries around the world – have headed straight to London when it’ s come to buying property in the UK.
However, London prices fell by 0.6 % last year, according to data from Nationwide Building Society. But, interestingly, statistics released by Hometrack showed Manchester, Birmingham and Edinburgh having soaring house prices compared to other UK regions, with a growth of 7.3 %, 6.7 % and 6.6 %, respectively. This is part of a price correction going on to redress the imbalance in the UK economy as a whole, with regional cities catching up to the phenomenal growth that London has seen.
It’ s important to remember, though, that it isn’ t enough to simply earmark a location and hope for the best. Sector is key and student property is often a profitable route to take due to high yield potential and their strong performance in regional cities – creating the perfect formula for a sustainable income and future growth.
If we take Manchester as an example, it is home to two of the UK’ s five largest universities, while the city’ s four institutions attract 100,000 domestic and international students each year.
Despite this huge population, though, Manchester has one of the most undersupplied student property markets in the country. As a result, purpose-built student accommodation from private developers now represents 30 per cent of fulltime first-year undergraduate housing choices, up 22 per cent from just five years ago.
The UK student property market is truly one of the most important assets that SA investors should be shortlisting when looking at diversifying their wealth overseas and, in conclusion, one that they cannot afford to discount when looking at where to apportion their wealth.
For further advice on how to invest in the UK student property market, visit: www. selectproperty. co. za.
44 AUGUST / SEPTEMBER 2018 SA Real Estate Investor Magazine