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Internationals drive uni halls investments, UK

Student accommodation in the UK will remain a good bet for property investors as international enrolments continue to rise over the next decade, a leading property investment firm has claimed. The firm, Assetz, believes the growth would come in spite of government plans to curb student visas by 25% and be enough to offset declining domestic enrolments, showing considerable faith in the inbound market.

At Edward Street hall, Sheffield, five bedroom apartments start at £237,500 with projected gross yields at 8.65%At Edward Street hall, Sheffield, five bedroom apartments start at £237,500 with projected gross yields at 8.65%

"investors are getting gross yields of 8% to 10%, nearly double the average in the buy-to-let market"

“[Visa curbs] have definitely had an impact on non-HEFCE [Higher Education Funding Council for England] affiliated language colleges and courses that can be sometimes act as ‘feeder’ courses for universities, but we expect absolutely no direct impact on HEFCE-affiliated universities whatsoever as those applying for degree courses are still very much eligible for student visas,” Stuart Law, chief executive of Assetz, told The PIE News.

“Since investors have always focused on providing student accommodation targeting the most prestigious universities, they are unlikely to be affected by the changing visa rules in any way shape or form,” he added.

Law said courses were still oversubscribed and pointed to British Council predications that more than 30,000 more international students would enrol in the UK by 2020 – a 10% rise on the current 428,000.

He added that the 8.5% rise in overseas undergraduate applications recorded by UCAS this June – which defied expectations – offset an 8.7% fall in domestic interest due to poorer graduate job prospects and the fees cap rising to £9,000.

The 8.5% rise in overseas undergraduate applications showed international demand could plug the gaps

The firm believes this presents a low risk, high return investing space. “The higher rates investors in the sector are getting gross yields of 8% to 10% (roughly 6.5% net), nearly double the average yields in the broader buy-to-let market,” Assetz said.

International education partnering organisation INTO University Partnerships, which runs its own student property division, said its accommodation operated at “98% plus capacity year round” and agreed it had “seen significant growth in demand”.

However, it said:  “It is absolutely critical that as a country we present positive, welcoming messages to international students and do not allow unfounded fears on immigration deter international students from continuing to the select the UK.”

Law said sector fears of an enrolment crash were overstated. “Universities will not publicly state that they are not concerned about reduced funding budgets or student numbers as they will be further hit with cuts.”

INTO University Partnerships has seen growth in demand for its accommodation this year

He added that foreign students made reliable customers, tending to have greater spending power and be more likely to stay in student halls for the entirety of their course.

According to research from commercial real estate advisor CBRE, the UK student housing market accumulated around £740 million in 2011. However, according to real estate services firm Jones Lang LaSalle this could rise to £2.3 billion by the end of 2012.

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