Real Estate Investor Magazine South Africa December/ January 2018/2019 | Page 58

UNITED KINGDOM
Hoping to send your
children to study abroad?
now is the time to invest in international property
BY LISA BATHURST
T
his is an exciting time of year for teens finishing grade
11 and matric, as they decide on what they want to
do after school. Where they want to study, locally or
internationally, and which universities to apply to? For parents
hoping to send their children abroad, this is a good time to
consider investing in an international property asset.
The UK, with its excellent universities - from Oxford and
Cambridge to the universities in Sussex, Leeds, Liverpool
and Newcastle – is one of the most popular destinations for
international students. There are more than 60 university cities
and towns around the UK, and as the medium is in English,
the currency is stable, and safety is not a concern, it is an
increasingly popular destination for South African students.
“The UK has seen record intake numbers of foreign
student for the last four consecutive years,” says international
investment property specialist and founder of Hurst &
Wills, Lisa Bathurst. “This growth shows no signs of slowing
down with the weakened sterling making it more alluring
for international students and their parents. For the fifth
consecutive year, a record number of non-EU students have
applied to study in the UK. The British Council predicts that
the pool of global ‘travelling students’ will double to eight
million by 2025, with Britain set to attract more than the US.
To add to the appeal of excellent university choices in the UK,
there are also affordable and good investment opportunities
in UK property market. Student accommodation – known as
purpose-built student accommodation (PBSA) – is thriving
in the UK. It is the UK’s highest yielding property asset with
the total investment in the sector increasing consistently over
the past few years. In 2015 this sector overtook the US as the
largest student property market,” says Bathurst.
“It is an affordable investment, for as little as R1.3m, you
can own a full title offshore student studio apartment,” says
Bathurst.
The two main types of student accommodation in the UK
are cluster flats, which are less expensive units with shared
kitchen and lounge spaces, and the more luxurious option
of studio flats, which command higher rents. Especially
in the emerging university towns, cluster accommodation
is booming. However, in established university cities, like
Newcastle, Liverpool and Leeds, where there are a number of
institutions and many students, there is a demand for more
luxurious studio apartments.
Although buying student accommodation your own
children could stay in when they study sounds like a nice idea,
with so many universities abroad it is tricky to plan very far in
advance. Bathurst says, “With student numbers out weighing
student beds 3 to 1 in the UK, my advice is to take advantage
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DECEMBER 2018/JANUARY 2019 SA Real Estate Investor Magazine
of this opportunity. Invest in a student flat in a university
location that offers the best investment and yield, even if your
children won’t end up studying there,” she says. “The yield from
a carefully chosen investment property will provide a monthly
income in a stable currency directly into a bank account where
the property is. Your child could use those funds to pay their
rent at their chosen studying location.”
Bathurst highlighted a project Hurst & Wills are launching
soon, situated close to Newcastle Under Lyme and Keel
Universities and the nearby Stoke University. With three
universities and large number of students Newcastle is ripe for
top-end studio units. “There is such an undersupply of student
housing in Newcastle,” says Bathurst. “The demand from those
three universities is 25 000 strong, and there are currently only
500 studio apartments.”
“We are very excited about this new development,” she
says. “These are luxury studio student accommodation units,
available from £74 600 (approximately R1,3m). There is a 7.5%
NET yield guaranteed for 5 years and it is full managed and
completely hands-off,” says Bathurst. “They are fully furnished,
including a TV, and built by reputable, leading developers with
30 years of experience.”
Student accommodation is also popular elsewhere in
Europe, such as Lisbon and Porto in Portugal. Bathurst says,
“In Porto it’s still possible to buy plots or buildings to develop
or refurbished in the centre of Porto or close to universities
for affordable prices. However, we expect this window of
opportunity to close soon, as real estate demands are increasing
rapidly.”
Mckinsey & Company have estimated that international
income of Higher Education in Portugal could reach €1.4bn by
2020. The high demand from international students wanting
to study (and live) in Lisbon has led to many universities
investing in new campuses and student housing complexes.
According to Bathurst, there are currently 56,000 out-
of-town students living in Lisbon, 16,000 of which are
international. With only eight private PBSA developments
available, limited to 450 students. Porto is experiencing the
same market momentum, but at a smaller scale. “The existing
supply of private PBSA, which was developed and is operated
by national players, is fairly recent and shows occupancy rates
of around 100%,” says Bathurst. **JLL estimates a shortage of
13,000 to 18,000 beds in Lisbon, Porto and Coimbra.
“It is important to work through an independent property
specialist, especially in this booming market,” says Bathurst.
“Developers could mislead clients as they are under pressure to
sell their own stock, while independent specialists are unbiased
and work for the client.”