Savills’ latest student housing report reveals that Manchester has become one of the nation’s leading property hotspots for Purpose-Built Student Accommodation (PBSA). As of 2015, the city’s investment potential for bespoke student accommodation has now surpassed the likes of famous university cities Oxford and Cambridge, amongst others.
The report confirms what savvy investors already know to be true: regional housing markets like Manchester increasingly require new PBSA supply to meet local demand for student housing. New-build student housing is said to be supporting the British economy by contributing £40billion to the country’s overall Gross Domestic Product (GDP), with students being crucial to population growth and housing demand in many UK regions. Moreover it is said that more PBSAs could help ease the country’s chronic housing shortage by freeing up an additional 77,000 homes, which could make a substantial difference in some local areas.
Overall, investment into the PBSA market last year was worth an impressive £2.45billion over a fifth more than the previous year. According to Savills’ report however, this number has already been exceeded in the first five months of 2015 alone, with investment (on both a standing and site acquisition basis) being as high as £4.2billion – a huge 70% above last year’s figure.
The first five months of 2015 alone have seen investment being as high as £4.2billion
It is no surprise then that Manchester has moved up the ranks to a first class PBSA market, as it continues to attract big investment and maintains a healthy and active student accommodation market. Nevertheless it is not only Manchester’s PBSA market that is flourishing – its residential housing market is currently also on the rise. According to research by UK bank HSBC, Manchester’s private rented sector offers investors average gross yields of approx. 8%, low void periods and high tenant demand for rental properties. The same research also found that an average home in the Manchester area is in fact worth £108,870 and landlords can expect to charge monthly rents of as much as £719.
With both the PBSA market and the residential housing sector performing exceptionally well, Manchester is certainly living up to its reputation as the UK’s second city, directly competing with the country’s capital in terms of housing, investment and general business activity. Today’s investors have the great opportunity to invest into Manchester, be it in the form of PBSA or standard residential developments, as Manchester’s situation is about to further improve thanks to the £1billion Devolution Deal (with the Greater Manchester Mayor being elected in 2017) and the work on the much anticipated HS2 high speed railway scheme finally beginning in three years’ time.
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