Total returns of 14.65 % have been claimed. However, on average, an investor can expect in the region of between 6-10%.
The recent Knight Frank Student Property Report stated that:
According to data from the Universities and Colleges Admissions Service, demand for academic courses is at an all time high with nearly 700,000 university applications in 2010. There has been a significant rise in demand from the EU, the Far East and Hong Kong.
Whilst the foreign demand may well be correct at present, the UK student sector could be in for some changes in the coming months.
Many oporators in the sector believe that the upward trend in this investment is set continue in the short term through to 2012. This is largely down to the record applications for university places this year. Students are scrambling to get places before the new fee structure kicks in next year.
But what about after this period is over? Is it not possible that the demand will start to fall off as less students can afford to attend UNI? Any investor looking at this class right now needs to consider the future trends more closely, rather than just examining the past performance. Past performance can never be a guarantee of future success. It can only form a guide.
Supply & Demand
Currently there is high demand due to under supply. There have been many changes in recent years. Local councils have woken up and recognised that students spend money in the local economy, and hence, have been on a buiding spree to erect more student accommodation in big student cities all over the UK so as to cash in on the trends.In those areas it had the effect of forcing some local landlords to get out of the sector altogether as competition from local government proves to high.
Two routes are open to the student accommodation investor; fully managed via specialist agents, or converted property which is often on a HMO basis.
Positives Of Student Accommodation Investments
Has been strong investment in the past.
Can be a good yield for long term investment.
Traditionally high demand and under supply.
Generally a resilient investment sector.
Negatives Of Student Accommodation Investments
Lack of significant capital gains.
Service charges and maintenance bills could lessen yield.
Glut of newbuild flats on the market from councils and developers.
New government rules for students may mean less demand in coming years.
Investing in this market needs careful consideration and a lot of research. It may be best to wait until the new rules take effect so as to better judge the true risk.