Student property is one of the most successful real estate asset classes, forecast annual returns of around 9% this year.
An increasingly popular investment
The sector has ballooned from a fringe investment 10 years ago to a global market worth $200bn today. The growth has been underpinned by a rise in the number of students — up from 98m in 2000 to 165m in 2011.
Private and institutional investors have been attracted to student property as an asset class due to the relatively high yields on offer, which look set to continue in the foreseeable future.
Figures from Knight Frank, the high-end estate agent, forecast annual returns of around 9% this year.
“Student property is one of the most successful real estate asset classes, thanks to stability of demand for student bedrooms from all over the UK. The market is still structurally under supplied in all core university cities,” says James Pullan, head of Knight Frank Student Accommodation.
Buy a student property
The most direct way to get exposure is to buy a property and let it out to students. Many investors are attracted by higher yields, “joint and several liability” leases — which make each tenant individually responsible for all the rent and damages — and personal guarantees by parents.
But as with any buy-to-let investment, it is essential to choose your location carefully. This has become even more important following the government’s reform of university funding in 2012.