The best performing asset class in Great Britain

With upwards of 2.3 million students in the United Kingdom, most of which do not have access to university-provided accommodation, the demand for student accommodation has seen exponential growth over the past few years, says James Bowling, CEO of Monarch & Co, a company that specialises in investor and immigration programmes around the world.  He notes that as a result, the student property market has gained a longstanding status among investors as the best performing asset class in Great Britain, with many eager to diversify their property portfolios in this niche market.

According to Bowling, not only is there an annual influx of British students looking for accommodation, but there is also a growing number of international students who are moving to the UK to attend higher learning institutions. Over the last five years, international student numbers in the UK have increased by 30% and according to the Department for Business, Innovation and Skills, the percentage of foreign students is likely to grow by a further 15% to 20% over the next five years.

“While the demand for student accommodation is increasing each year, the current supply of housing available to students is limited. As a result, the need for student accommodation has become evident, with students currently having to share accommodation with multiple other students in tired, run-down houses. Traditionally the quality of student accommodation has been poor and investors are receiving little to no return on their investments,” says Bowling. “In light of this, developers are jumping at the opportunity to build further student accommodation that will meet the need for student housing as well as investor demand.”

Bowling notes that developers have specifically targeted areas in the UK where student housing demand is at its highest, such as Newcastle and Liverpool. “Currently Newcastle has one of the highest demand-to-supply ratios in the UK, with four out of every five students looking for purpose-built accommodation. The two prominent universities in the area, namely Russell Group Newcastle University and Northumbria University, attract around 50 000 students, with 40 000 of these students without access to purpose built accommodation. This makes the potential for investment apparent,” says Bowling, who believes that student accommodation in Newcastle is possibly one of the best investment options in the UK at the moment.

Bowling points out that the student numbers increasing, added to which, in the last year Newcastle has seen a rental increase across studio stock of around 6%. “There is a growing mobile global student market that is looking for high quality, purpose-built housing. Investors will be able to take advantage of this gap in the UK market and see healthy returns on both their rental potential and asset capital appreciation over time,” says Bowling.

He notes that investment opportunities like this provide South African investors with the chance to benefit from the strength of the British economy, the currency and a gap in the market. “Purchasing a student property in the UK will allow investors to diversify their investment risk and mitigate any loss that they may incur from a weakening rand,” says Bowling.

Monarch&Co currently have a number of opportunities for those interested in investing in UK property.  In Liverpool, the company has access to range of investment units in a student development from clusters of ‘student pods’ to spacious duplex studio apartments, providing a broad range of investment opportunities for investors with differing budgets. Made up of 311 units, this development is set to take full advantage of its prime city centre location in the heart of the Baltic Triangle, Liverpool’s up-and-coming creative district. “The location facilitates excellent net yields with future values set to rise as the area continues to undergo a substantial investment programme. In addition, the scheduled rental income is in line with the popularity of the area with students,” says Bowling. The development will be ready for student intake in September 2016.

In Newcastle, Monarch&Co’s Purpose-Built Student Accommodation (PBSA), has been developed by the UK’s most acclaimed and reputable student accommodation developer. Central to an impressive urban vista and within a few minutes’ walk from the £8.6 million refurbished Newcastle station, the development includes 259 properties, which have been architecturally designed and furnished. These self-contained studios, which range in size from 19m2 to 39m2, come complete with a quality fitted kitchen and en-suite shower room.

Talking about appreciation, Bowling says that over the course of the previous developments, investors who have resold their property have achieved between 8% and 15% capital appreciation between the time of purchase and the time they resold at completion. Added to this, he notes that during the period between completion and tenancy at the start of the academic year, investors will receive immediate rental returns of

an annualised, above bank rate, 4.5%. “As the development will be completed six months prior to the academic year starting, Monarch&Co will work hard to maximise on the development’s potential by taking advantage of summer lets. This has secured an annualised 4.5% return for the period between completion and September 2016,” he says.

“Investing in the UK student property market will provide investors with a solid asset class in which to diversify their investment portfolio and see excellent returns over the short and long term,” Bowling concludes.