UNITED KINGDOM
You can own it too
Strong growth for UK student housing
O
LISA BATHURST
Lisa Bathurst is the founder of Hurst & Wills , a boutique international real estate advisory based in Cape Town
wning high-yielding property in the UK is much more affordable than you think , not quite the high net worth investor playground many believe it to be . In fact for as little as R1.2m , you can own a full title offshore property in one of the most successful property investment sectors : Purpose built student accommodation ( PBSA )
Some of the world ’ s richest people and sovereign wealth funds are turning their attention to student housing . Increasingly luxurious and expensive , these purpose built accommodation options are fast becoming regarded as a must-have part of an investment portfolio . In fact , 70 % of investment comes from international investors .
The UK is the second most popular location for overseas students , resulting in record student intake numbers for the last four years in a row . This growth shows no signs of slowing down , with the weakened sterling making it all the more alluring for international students and their parents . In 2017 , around 505,680 new students were accepted across the UK and , for the fifth consecutive year , a record number of non-EU students applied . The pool of global “ travelling students ” is predicted to double to eight million by 2025 , with Britain set to attract more than the US , according to the British Council .
Consequently , new accommodation has to be built and the solution provides an interesting opportunity for investors to join hands with property developers .
Focus on student accommodation
Purpose built student accommodation is the UK ’ s highest yielding property asset and has seen total investment in the sector consistently increase over the past few years . The sector overtook the US as the largest student property market in 2015 and was heralded as a World Class Asset .
The UK is still a global education hub , attracting the best students from around the world . Even with Britain ’ s exit from the EU progressing , the relatively weak Pound has attracted additional applications from non-EU students , with their numbers rising 5 % over the last year . It is a key market , as 23 % of the UK student population is now from overseas .
Student accommodation schemes can offer net rental yields of 7-8 % and are perfectly suited for overseas investors and retirees alike as a steady and guaranteed investment plan .
We are certain that UK student accommodation is set to remain popular due to its recession-proof qualities , alongside supply still unable to keep up with demand across the UK . The sector has grown by 37 % since 2014 , from £ 30.9bn to £ 42.5bn , making it one of the fastest growing asset classes in the UK property market .
South African investors are attracted by the strength of the UK ’ s higher education sector . Just as it did during the economic downturn , UK student accommodation is proving resilient to concerns about Brexit . While it may be that the weaker pound is more attractive to overseas students , it also proves the ongoing demand for UK higher education .
This is an affordable asset class for South Africans and works as a good complementary wealth strategy to listed products and a diverse investment portfolio . In some cases , we are seeing yields that match those of attractive listed property funds .
However , be careful . With the attractive yields and increasing popularity , there are some developers that have jumped on the bandwagon to produce schemes that may not be the investment they appear to be . Choose your city and your student investment property well and get the right advice from those who specialise in it , parting your cash only to reputed agents and developers with experience and a proven track record in this sector .
50 MARCH 2018 SA Real Estate Investor Magazine