During the 2014/15 academic year UCAS reported the highest ever number of students entering their system- just short of 500,000 new undergraduates in the one year alone. The strong reputation of the UK’s further education system is growing around the world. Despite the 2012 price increases from £3000 to £9000 per year, potential students have not been put off and these UCAS figures seem set to continue growing over the coming years.
A lot of this is thanks to a massive increase in international students choosing to study in the UK, which is now the second most popular country for foreign students to study in after the US. In 2004 there were 15,450 non-EU students studying in UK institutions and only a decade later, in 2014, there were over ten thousand more – 26,070. The amount of EU students has also grown by around 10,000 in the last ten years, from 28,875 to 38,230.
52% of foreign students live in purpose built student accommodation
These increases are in direct correlation to the growing popularity of the student housing sector. A National Union of Students housing report shows that 52% of foreign students live in purpose built student accommodation (PBSA), in comparison to 27% of UK students. The appeal is no surprise given the first class facilities, central locations and ease of living offered by PBSA.
This report was not solely focused on increasing student figures though; it also highlighted a weakness in the market- the popularity of London to investors versus what it actually offers in yields. In fact, 35% of the £2.4billion was invested into the capital, but now “The London pipeline has all but dried up”. The student accommodation sector may be flourishing, but those lured in by the capital’s reputation alone will simply not receive the same returns regional locations offer.
Nevertheless, the rest of the country will still see positive yields with average returns at a massive 10.86% from September 2013- September 2014. This is up from the 9.95% in 2013 and 9.75% in 2012. Again, looking at the year until September 2014, average rental growth for regional towns had increased by 2.51% whereas London only saw rises of 1.18%, ultimately preventing yields there from increasing.
All in all, it is no surprise that student housing is more popular than ever before, especially amongst international buyers who have the strongest demand for property. This is partly thanks to the stability, impressive reputation and high yields of the market in comparison to other nations’ housing markets. Another part of its popularity has also been accredited to the simplicity of the sector.
Now is the perfect point to invest into student accommodation
Student housing clearly has gone mainstream. The amounts of students and investors are both rising, reflecting an increasing size and importance of the sector. It is interesting to see the growing importance of the international community on the British property market and their positive economic impact. The outlook is overwhelming positive and echoes many other key reports, so with such a clear forecast ahead, now is the perfect point to invest into student accommodation.