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Is student property a good investment?

Is student property a good investment?

Broadly speaking, the answer is yes, student property investment is a good investment and has been for some time. It’s not always just as simple as that, however, because it may well not suit your specific circumstances as a property investor. 

Different types of property investment are better for different investment profiles. If, for instance, you want quicker short-term price increases on your asset, then you’re usually better off going for city centre, off-plan apartments that appreciate quickly in value. 

If you’re more interested in a longer-term investment that carries more stable income returns but holds its value, then residential investment property in more suburban areas is likely to be better for you. 

So what does student accommodation investment look like for you? And what sort of investment profile does it suit? 

Why is student property a good investment?

Let’s start with some raw numbers – the UK student population is growing year-on-year, and is expected to continue to grow. According to higher education student statistics from HESA, the student population grew 13% in 2021, with foreign students increasing by 4%. 

This increase in students has had another positive effect in that, rather than seeing student populations concentrated in traditional areas around the south or in larger northern city centres, many are now moving out of these traditional university areas to towns and smaller outskirts of urban centres in order to attend. 

Areas such as Salford, Bolton, and Stoke-On-Trent are now seeing huge investment into their areas and large influxes of students into their institutions. Locations such as these, for example, also offer access to the student lifestyle, with vibrant city centres full of bars, restaurants, shops and local amenities.

Examples of excellent investment opportunities just in these towns and cities are Cheltenham Place in Salford, which offers 7% NET yields and Kiln House in Stoke-On-Trent, which offers a guaranteed 7% NET yield for 2 years.

Clearly, these are very strong returns, with varying levels for the price of entry. Kiln House starts from just over £70k whilst Cheltenham Place starts at just under £125k. 

Of course, it should be kept in mind that the resale price of these types of properties doesn’t really tend to increase significantly over the course of your investment, but provides excellent and stable returns, with student numbers steady and accommodation often in short supply. 

For property investors then, the incentive to get into student property is clear. As noted by Buy Association, “Privately rented properties are the most popular choice of accommodation during university term-time. With this strong demand, investing in the student letting sector has become popular among both institutional and private investors.

A recent report by Paragon Bank examined the role the private rented sector (PRS) plays in the UK’s growing higher education system. Across the globe, the UK is the second most popular destination for students studying overseas.”

If you’re thinking about investing in student property, why not get in touch with us today?