University applications increased 8% in 2008 according to UCAS, resulting in an additional 42,000 students applying for full time university courses, which is set to increase again in 2009. The weakened pound has also led to a flood of applicants to UK universities from across the world.
This surge in demand is generating superb opportunities for professional property investors who purchase apartments in private university halls of residence, or invest in traditional shared student houses. Investors can enjoy high net yields in the region of 5-6% (8-10%+ gross), as a result of strong demand and firming rents. With even more people now opting to go to university, in a bid to both improve their long term job prospects and delay starting their career until the economy recovers, the potential returns for student property investors are set to rise further.
Stuart Law, Chief Executive of Assetz, comments: “Investment in university accommodation is already paying massive dividends. It is an area in which I have invested personally over the years and it is the best performing part of my portfolio for income. Student property funds have also topped the leader board of property fund performance over the past couple of years, and the latest surge in applications will continue to drive demand and further enhance the investment potential.
“Student property offers investors a high income investment, partly due to huge tenant demand and partly now as a result of the relatively low mortgage rates available. With traditional buy to let landlords currently seeing stable, rather than growing, rents and rising unemployment underway, this is one sector of the property market which is set to benefit from the economic downturn and is a great diversifier."
