Students rents are expected to rise by up to 3% in London and 2.75% in the regions in the next 12 months, according to property developer Knight Frank. This will raise yields for investors but also impact foreign and domestic students’ wallets.
Driving the trend is a combination of high demand and a shortfall of places in university halls, which is pushing up rents across the country. Knight Frank claims that the UK’s lure as a “global knowledge centre” for foreign students is also having impact.
“Student property is one of the most successful real estate asset classes, thanks to stability of demand”
“Student property is one of the most successful real estate asset classes, thanks to stability of demand for student bedrooms from all over the UK,” Director James Pullan said. “The market is still structurally undersupplied in all core university cities.”
Despite UK-wide opportunity, investors are increasingly attracted to the capital – this despite the fall in overall student numbers this year after the domestic tuition fees cap was raised to £9,000. London universities still believe their applications will increase next year, and around 95,000 students are expected to be looking for private rentals in the city, meaning opportunities for smaller landlords and developers.
Knight Frank, which predicts investor yields will average 9.2% next year – higher than most asset classes – said that much new investment was entering the sector.
“We are already seeing substantial equity, most of it international, chasing these assets – and the first student property real estate investment trust recently launched and is already finding keen interest in the UK and overseas,” said Pullan.
