Why Student Property Investment is a Lucrative Choice for UK Property Investors
Published by Magnate Assets on
Nov 10, 2023
Investing in student accommodation has emerged as an increasingly attractive prospect for property investors in the UK, driven by several compelling factors. StuRents, a prominent student lettings business, reports that the 2024-25 academic year's accommodation booking cycle has kicked off in certain cities earlier than ever. This early start is a clear indication of the growing demand and scarcity of student housing across the nation.
The soaring demand for student rentals is reflected in the substantial year-on-year rent increase, which now surpasses 10%. This remarkable growth rate is particularly noteworthy when juxtaposed with the 6.7% general inflation and a modest 2.8% increase in student maintenance loans for the 2023-24 academic year. Such a rent hike is an enticing prospect for property investors.
The average cost of a bedroom in a shared student house has now reached £122 per week. In purpose-built student accommodation, the average price per bedroom stands at £184 per week, representing a 50% premium. These price points create an appealing financial landscape for investors.
Moreover, student search budgets have expanded by an average of 7.3% in the 2023-24 academic year, reaching £152 per week. This uptick underscores the willingness of students and their families to invest in higher-quality accommodations, further bolstering the prospects for property investors.
Despite the burgeoning demand, the delivery of new purpose-built student halls has been sluggish, with a mere 12,000 beds prepared for the 2023-24 academic year, a significant drop from the 36,000 available in 2019. The implications of this supply-demand imbalance are significant.
StuRents predicts that the gap between supply and demand will likely worsen in the coming years as the delivery of beds fails to match the growth in demand. The business forecasts a shortfall of 490,000 beds by 2026, emphasising the urgency and potential for investors to seize this opportunity.
Richard Ward, the research head at StuRents, highlights the favourable dynamics, stating, "Supply and demand fundamentals at a national level remain extremely bullish for operators. These dynamics are driving unprecedented rental growth. All the early indicators suggest further substantial hikes for 2024-25." This outlook affirms that student property investment in the UK is not only promising but also positioned for continued growth and profitability.