Student accommodation - A sound investment opportunity

The UK has always been a top choice for international students to pursue further education amongst the various study destinations across the world. Statistics suggest that nearly 437,000 international students attended UK universities between the years 2014-2015 generating almost £26 billion for the economy.

While there have been concerns about the international student numbers declining in the near future due to Brexit, UK universities have pushed the government for a “new immigration policy” to encourage international students to choose the UK as their education destination.

In fact a ComRes poll initiated by Universities in the UK established that nearly 73% of the British public was in favor of international students coming to study in Britain as they saw them as valuable guests (generating revenue for the economy) rather than long time migrants. Should the government give in to the mounting pressure to amend immigration policies for international students, the general consensus seems to indicate a continued influx of foreign students into the UK.

The housing sector has traditionally been one of the top beneficiaries of foreign students in the UK. The significant student population has created a sound investment opportunity for anyone willing to cater to the lodging needs of these students. An analysis of 79 university cities and towns, including London concluded that the student accommodation sector is heavily under-supplied resulting in a scope to plug the gap. In the past the sector has attracted significant foreign investment too, with Singapore based Mapletree Investments Pte acquiring 25 student accommodation properties in the U.K. in March 2016 in order to be a part of what it believes is a ‘recession proof’ sector.

The city of Manchester which is home to several universities and colleges such as University of Manchester and Manchester Metropolitan University has been in the news for substantial investments being directed to bridge the student accommodation gap in the area. The University of Manchester recently awarded Carillion a £75m contract to design and build phase 1 of its planned Fallowfield student village project. The village is set to consist of 1,122 bedrooms arranged in eight accommodation blocks together with an energy center and a student amenity hub.

The factors that make the market attractive include the greater spending power students have today compared to their counterparts a decade ago. James Davis, who serves as chief executive of the online estate agency Upad says that the student numbers in the capital are rising at 15 times the supply of rental property. Sally Fraser, of Stacks Property Search reiterated why the student housing market is a solid investment opportunity: “With students, landlords have a guaranteed market that is predictable (compared to) whatever is happening in the economy.”

While large corporation are creating inroads into the student housing market, there is also a pressing opportunity for independent investors to capitalize in the sector. Acquiring properties and renting them out to students especially in cities like Manchester can prove to be a profitable endeavor.

Alliance Investments, a subsidiary of Property Alliance Group has identified the demand for housing supply in the student accommodation sector. With a large number of properties to choose from in prime areas that are conveniently located in the heart of the city, Alliance Investments is offering a market leading minimum of 8% per annum on a 5-year period for investors looking for lucrative returns.

For more details on student accommodation and investment opportunities, view our latest developments and new builds in Manchester.