With large investors piling into the student accommodation market, is now a good time for a private investor to part with their cash?
Investors are increasingly attracted to the rate of student property yields - some developers are even offering a 7% yield that is guaranteed for five years, much higher than the average buy-to-let yield on a private property.
Indeed, universities are increasingly making agreements with property developers to build student accommodation that have levels of luxury that were unheard of years ago.
Among them is an impressive new £17 million scheme in Exeter, funded by Vita Student, that offers investors a 7% yield.
Investing in student property
Property developments offer impressive opportunities for investors looking to enjoy the boom in quality student accommodation.
To underline this fact, the Exeter scheme has 161 apartments for students to rent, and more than half were sold within a week of their launch. The returns being offered by the developer are guaranteed; this is because they’ll provide the initial wave of students to rent the properties, though in future this process will revert back to the owner to undertake.
This impressive take-up of student accommodation is not just happening in Exeter; it’s also taking place in all of the major student centres, such as Manchester, Leeds, Liverpool and Bristol.
The attraction for universities is that they get high quality accommodation which can then be rented out to students as part of a course package. In Liverpool, studio apartments can be rented from £119 per week, with bills included.
Yields for student accommodation to grow
The impressive returns have not gone unnoticed by the property market, and estate agent Jones Lang LaSalle says the UK market for student accommodation has rocketed in size by 125% since 2011.
It looks like the student accommodation market will grow over the coming years as more youngsters head to university to further their education.
This post was contributed by Accommodation for Students, the No.1 Student Accommodation website displaying all types of student housing including flats, shared houses and private halls of residence.