Student property will continue to thrive in 2017

Student property will continue to thrive in 2017

2016 was a bumper year for student property and all the experts predict that 2017 will be the same. Despite the uncertainty surrounding Brexit, Purpose-Built Student Accommodation (PBSA) remains a very attractive asset class and investors, especially those from overseas, are cashing in.

With the low value of the pound currently, international investors, particularly from China and the Far East, have been showing significant interest in UK-based student property and this has led to many apartments being snapped up.

According to the latest stats from Knight Frank, the PBSA sector in the UK will reach a value of just under £46 billion by September 2017, which is a staggering 37% growth since 2014. This easily makes PBSA one of the fastest growing asset classes in the UK Property market.

Knight Frank have forecasted that around 24,000 beds will be added during 2017, making the total of beds devoted to PBSA being around 550,000 across the whole of the UK. And, believe it or not, this is still not enough to accommodate all the students that crave to live in these properties.

Further good news for investors in this sector is that 2.5% rental growth is expected over the next 12 months, making the yields even more attractive.

The resilience of PBSA

A key feature of PBSA and what makes it so attractive to investors, is that it has proven to be resilient in the face of economic uncertainty. There will always be students, the UK will continue to attract students because it has some of the best universities in the world, and increasingly, students want to live in the quality of property that PBSA delivers. Living in crowded, insalubrious HMOs no longer cuts it for your average modern student and that’s been a significant factor in why it’s been so successful.

Summary

So, to summarise, in 2017 we will continue to see strong demand from both home-grown and international students in PBSA, rental growth is on the increase and there is a good pipeline of future PBSA developments on the horizon. Investors will continue to increase their portfolios with student properties and its cities such as Manchester, Glasgow and Southampton that are set to see the biggest rises in rental costs. This is because these locations have the most significant supply and demand issues in this sector, so PBSA can command a premium.

2017 continues to be an exciting time for PBSA investors so please get in touch if you would like to find out more about the superb opportunities that are available.