Close to 500,000 overseas students from 200 nations come to the UK each year to study at a school, college or university.
The UK has a long history of welcoming international students from around the globe. And with a reputation for academic excellence, it’s easy to see why so many international students choose a UK education.
Since restrictions on the number of EU student places was relaxed in 2015, universities have increased their intake of students from member states by over 40%. This has the led to a record amount of purpose-built student accommodation being built and demand is not slowing down.
This increase is putting a greater emphasis on the importance of purpose-built student accommodation and for investors this can only mean a good thing.
Universities now have a greater flexibility when it comes to the students they accept and it means that larger numbers of overseas students will be looking for accommodation. Many of these students come from affluent backgrounds, which means that they have specific requirements when it comes to their accommodation.
As higher education student numbers increased last year so did levels of student property investment, which hit around £6bn in 2015.
There’s a good reason why investors are turning their attention to student property. This asset class offers investors strong yields and good capital growth.
Students no longer require halls of residences or homes with multiple occupancy because they now want to get the most from their university experience. Purpose-built student accommodation comes with state-of-the-art technology, gyms, communal rooms and free wi-fi. In other words, they offer complete luxury and this is why students are seeking them out.
Many students believe that purpose-built accommodation enhances their university experience in every way possible. Students are also willing to pay a premium for this, which can only benefit investors.
The low supply of student accommodation helps explain why this asset class is outperforming all other UK investment.
According to data from the Universities and Colleges Admissions Service, overall university applications and acceptances are up 3.4% and 3.3% respectively for the current academic year, equating to 16,800 more acceptances than the previous year.
This brings the total number of higher education students in the UK to over 500,000 for the first time. As the number of students continues to grow year on year, purpose-built accommodation it is likely to see higher levels of investment.
However, demand for luxury student accommodation will continue to exceed supply which means premiums are likely to continue to rise.