Student accommodation has always been a popular investment, with its low entry price and high yields, but in the in the last year, it has really held its own in an otherwise turbulent market.
A recent report has found that the rental demand for student accommodation in the UK has managed to remain high throughout the pandemic, which has helped to maintain high rental yields in the surrounding areas.
The report – which was carried out by student accommodation platform UniHomes – analysed rental yields in postcodes surrounding main campuses of the top 100 universities in the UK, and considered how they had changed since early 2020, before the pandemic. UniHomes found that the areas surrounding the University of St Andrews in Scotland saw its average yields increase by 1.6% over the course of the pandemic, from 3.4% to 5%. Scotland fared very well in this particular study – out of the top ten universities, Scottish postcodes appeared in the list three times. Other universities that appeared in the top five in the list included the University of Aberystwyth (which saw an increase of 1.3% in yields), Lancaster University (1,3%), Loughborough University (0.9%), and Falmouth University (0.9%).
This is impressive data given the current circumstances that is not only affecting the student market, but the wider property market as well. When you look at the fact that universities have closed their doors for the best part of a year and the majority of students have been bound to carrying out their studies from home, you have to wonder how student accommodation has had such a successful year. According to Knight Frank, some of the biggest contributors to its success can be attributed to the rise in popularity of Purpose-Built Student Accommodation (PBSA). According to their survey, 69% of students living in PBSA were pleased with their provider’s approach to the pandemic and the support they had from staff when they had to either isolate or shield. This is compared to just 25% who were living in privately rented properties.
While students living in purpose-built accommodation often pay a premium compared to those who are in university-owned and privately rented accommodation, they believe it that it is good value as they have access to premium features such as high-speed internet, gymnasiums (when they were allowed to open), and access to their own kitchens and bathrooms. These particular amenities are often considered to be luxuries, but in a post-COVID world, they have actually become necessities as students have been carrying out their studies online and having to isolate or shield where necessary – so it should come as no surprise that more students are opting for purpose-built developments.
Co-Founder and Director of UniHomes, Phil Greaves, said: “Despite the pandemic and the restrictions imposed around face-to-face teaching for much of the last university year, we’ve seen a consistent demand from students looking for properties…”
“We understand that living away from home to attend university is a massive part of the student experience.”
“Even now, most will have secured a property for the next academic year, however, we are still witnessing a high demand in key areas.”
“This demonstrates the strength of the sector and with the appetite for student rentals only set to grow, we should see this positive trend continue as we approach the new university year.”
It’s fair to say that student accommodation is a safe bet for investors in the current market, and with the strong demand and high returns, it is certainly not an investment option to be sniffed at.
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