There has been a good deal of talk in the media recently about the prospects for the student housing market. The international real estate company CBRE reckons that even after current student housing developments are completed there will still be a shortage of accommodation in London. CBRE say that there are 3,000 bedspaces in the pipeline for delivery this year in London. In 2014 CBRE reckon that there will be an additional 6,300 bedspaces with a further 3,800 coming on line in 2015.
One of the interesting conclusions in CBRE’s research is that even after all the London pipeline places have been delivered there will still be thousands of students looking to find accommodation in the private sector. University halls of residence and similar types of accommodation provide something like 60,000 beds according to CBRE. This leaves a massive shortfall to be picked up by private landlords. There was a drop in numbers in London due probably to rising tuition fees but for 2013/4 it is expected that numbers will increase. There is no doubt that this area has generated a great deal of interest in the buy-to-let community and many of our landlord insurance clients have thought about putting a toe in the water. It is always dangerous to use the London market as a guide to what is happening elsewhere. Any investor thinking about this area needs to do very thorough research on the market in his or her area. There are many things to consider, including likely new developments of purpose built accommodation. If the local college or university is about to open a massive new hall of residence it could make life difficult. It may sound obvious but landlords need to take account of the fact that students are not long-term tenants and of course their properties tend to be empty over the holiday periods.
The property firm Knight Frank says that continued demand makes student property among the most successful real estate asset classes. The head of Knight Frank Student Accommodation is James Pullan. He points to “continued steady growth in all key English university towns, continued undersupply and the established perception of the UK as a top global knowledge centre”.
The UK has always been popular with overseas students. According to CBRE, nearly one third of London students are from overseas.
For more information, visit the Knight Frank and CBRE websites.
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