Student housing has come out as the best performing property asset in the UK & US generating double digit returns from strong rental growth, as reported in the FT. According to data from IPD, the benchmark property index, UK Student housing funds have produced 12% returns since the beginning of 2012.
Investment in the student housing sector has rapidly expanded to a global market worth $200bn. This is driven by the rising number of students. Lenders are also returning to this market as it is one of the few property types viewed as low risk and low vacancy rates of around 3%.
According to Philip Hillman at Jones Lang LaSalle, student accommodation is a must have investment for most large funds, where as not so long ago it was seen as an alternative investment only. In addition it does well in economic downturns as students stay longer at university obtaining skills rather than entering the job market.
IPD’s figures reflected the strength of this market showing Unite, the UK’s largest student housing provider outperforming all non-listed UK property funds during 2012.
James Mulcare, Investment Manager for HHInvest, the dedicated investment division at Home Hunts says “Student accommodation is a very attractive investment for our clients as it not only returns high yields but with high occupancy rates and strong demand for purpose built accommodation, it produces long term stable income streams. Targeting the right location is essential where there is a successful and expanding university with growing student numbers plus an existing shortage of accommodation to meet the current demand. With the increased student fees, students are expecting and seeking out the best options for their money as they are now paying more for their education and accommodation”
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