Feb 07
student living investment hotspots

What are the UK’s student living investment hotspots?

Location is one of the most important factors when it comes to purpose-built student accommodation and student living investment. We look at some of the most promising student development hotspots and the factors to look out for.

Purpose-built student accommodation (PBSA) has become an increasingly popular asset class for investors in recent times.

But with some university cities now having an oversupply of accommodation, how do you as an investor identify those schemes with greater potential for continued rental growth?

Get the true supply and demand picture

According to research from Knight Frank there are three full-time students per available bed space in the UK, so there’s clearly a need for new student living developments.

But the real supply and demand figure depends on the individual location. For example, Liverpool is often cited as a location with oversaturation of student accommodation, potentially limiting rental growth.

That said, an oversupply in terms of bare numbers doesn’t necessarily rule out development opportunities. Some towns and cities have lots of accommodation, but outdated stock or accommodation in the wrong locations.

This is particular true where new university buildings have sprung up in other parts of the city leaving some students with a long commute to campus. That can present opportunities for savvy investors to back new schemes in the right location.

Look for emerging markets with historic undersupply

A number of cities have been held back from developing new student accommodation because of strict planning rules. This is particularly true for historic cities that have a glut of heritage buildings and conservation areas.

These cities have plenty of outdated halls of residence accommodation, but a shortage of newer modern stock in the city centre. Faced with this chronic shortage, some local planning authorities are showing a greater willingness to work with developers, providing well-designed schemes can be delivered in suitable locations.

student accommodation investment

York is one of number of cities tipped for growth in student accommodation development

In the north of England cities like York and Lancaster, and cities like Cardiff, Bath and Canterbury in the south were previously in this position, but are now seeing more student development and a surge in rents.

Back the right type of accommodation

Another major issue for emerging student locations is the lack of studio apartments. This is especially true for those universities relying on traditional halls of residence, which cost more to upgrade and refurbish.

Innovative student schemes focused on studio apartments, inspiring communal areas and based in city centres or close to transport links will offer a stellar property investment opportunity.

We’ve talked previously about the importance of location and quality in student living investment in our previous post on investing in the right student accommodation.

Place value on reputation

With competition to attract students at an all time high, many universities are prioritising investment in their educational buildings and teaching staff to drive up standards (leaving private developers and investors to pick up the reins on accommodation development). This is not surprising given that students are demanding a better return on investment to justify the higher tuition fees.

What this means is that the better performing universities are likely to attract the most students which in turn drives demand for student accommodation. Look out for student development investment opportunities in those cities that are climbing the university league tables. The Teaching Excellence Framework (TEF), introduced in 2016 by the Department of Education is a good barometer for this.

Locations we’re tipping

With the above points in mind Fraser Morgan is actively looking to develop student living projects in locations including Lancaster, Preston, Manchester, Leeds, Sheffield, York, Loughborough, Leicester, Birmingham and Luton. We aim to have up to 10 student living schemes in the pipeline by 2022.

Fraser Morgan specialises in the development of city centre residential and student living projects. We are able to offer these developments on either a land only basis, or as a turnkey investment. If you have a land opportunity, or are interested in a student living investment with us, please get in touch with me, Mark Robinson, on 0203 086 8998.

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