Investing in student property in the UK 2020 / 2021

Whilst UK university campuses closed down during the lockdown, studying did not grind to a halt, for the most part lectures moved into digital format.  Undeterred by the possibility of beginning university studies online a record number of 18-year-olds in the UK applied to go to university, to begin studying in the autumn.

UCAS recently reported that by 30th June over half a million students across all age groups had applied for a place on an undergraduate course for 2020/2021, an increase of 1.6% on applications by the same point in the cycle last year.

Another trend likely to increase in the coming months as the UK emerges from lockdown is the return to university or the decision to attend university rather than head straight into the workforce, as the competition to secure jobs is likely to increase and additional qualifications improve job prospects.

Impact of Covid-19 on student property

Whilst there is expected to be short-term disruption, the long-term outlook and potential for investment found in student accommodation remains to be compelling.

Property investors consider the resilience of an investment asset, especially when investing with a long term view and student accommodation has proven itself previously having performed so well in the wake of the 2008 financial crisis, when there were widely drops in real estate activity, there was a large increase in the number attending universities and demand for student accommodation grew.

Not only did student accommodation prove to hold steady, it delivered robust returns for investors at a time when many other types of investment were not so profitable.

There is a strong relationship between the UK’s economic performance and the desire to study at university; student numbers often increase in times of uncertainty with many looking to ‘up-skill’.

Large real estate companies Savills and Knight Frank are in agreement that this downturn likely to be much shorter than the financial crisis but that a similar trend is likely to be seen with an increase in university applications over the next few years. Adding to an already steadily increasing trend.

Annual rental growth

Not only has the capital value of student accommodation proven resilient, rental growth has been impressive.

Knight Frank found that the average year on year rental growth has averaged 4.5% over the last 10 years, an impressive figure especially when compared with RPI average inflation of 2.8% and average rental growth for offices sitting at just 1.8% average over the past 10 years.

Why purpose-built student accommodation?

Record numbers are applying for university places for this academic year and beyond, pushing demand for student accommodation higher also.

With social distancing and cleanliness top on the list of priorities moving forward it is likely that self-contained studio apartments will be increasingly popular over shared houses.

The ability to restrict interactions with others whilst not missing out on the full university experience is hugely appealing to both parents and students. By being in a privately run building filled with other students, each living In their own unit whilst having access to communal facilities – purpose-built student accommodation is a preferable option.

UK student accommodation investment

The location that you choose to purchase student accommodation can dictate the level of success, certain areas offer better prospects than others. To discuss investing in student accommodation in the UK with a member of our experienced team of UK property investment consultants please do contact us.

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