Despite the Coronavirus pandemic, higher education in the UK remains popular with young adults. Lectures and seminars were moved online for most of the 2019/2020 academic year, but students are more than ready to return to the classroom.
The 2020/2021 academic year will continue in a digital format, but this hasn’t deterred people from applying to university. According to UCAS, over 500,000 people across all age groups applied to join a course, which represents an increase of 1.6% applications from last year.
Naturally, the online format of classes won’t last forever, and this year’s students realise that. As such, there was still the usual scramble between students for the best accommodation, and many were left disappointed. This is a great sign for investors, as it shows not even a global pandemic can stop the demand for PBSA in the UK. According to AccommodationForStudents (AFS), there was a 25% rise in the amount of students searching PBSA this year than in 2019.
There are many reasons why the UK in particular has a thriving PBSA sector. This article will highlight the reasons why you should strongly consider investing in this high performing asset class.
The UK Has the Strongest PBSA Market
Global investment into student housing has reached a new record, and over £12.3 billion has been invested into the asset class worldwide. The UK has been the biggest recipient of funding, according to Savills, with over £2.7 billion being invested into the country’s PBSA market.
The United States came second for funding, accounting for £2.6 billion, and Germany took the third position. It’s worth noting that even in third place, Germany only had £529 million invested into its PBSA market, proving the UK has the strongest market, and is therefore seen as the safest to invest in, across Europe.
The Growing Student Population
The UK is held in high regard for its educational institutions, and more people than ever before are applying to go to university. Currently, there are over 2.3 million students in the UK across 131 universities, and the population is continuing to grow.
By 2030, there will be an additional 135,000 English students studying in the UK. At the rate new PBSA is being built, the influx of students will lead to a greater imbalance between supply and demand for PBSA.
According to Select Property Group, the UK only has enough PBSA units to house 24% of the students who are actively looking for this type of accommodation. This tells us there is room for the sector to grow significantly, as so many students have to settle for a living environment that they deem unsuitable for their time at university.
As the student population grows, the demand for PBSA rises as it perfectly represents the way modern students want to live. The only way to successfully counterbalance the demand with supply is by having property investors step in to help meet the students’ needs.
The Appeal of a UK Education
The UK has one of the best educational systems in the world and is held in high regard. Due to the UK’s appeal, many international students choose to study here. In total, international students account for 19.6% of the UK student population, and over 100,000 come from China.
It’s no surprise that the UK attracts so many overseas students. Top university cities like Liverpool have sister schools in areas such as Shanghai, meaning many overseas applicants already have a strong connection with the UK.
In total, close to 60% of PBSA properties are rented by international students. This figure is set to rise in the coming years, as more students look towards the UK for its prestigious universities.
Different cities will hold a different appeal to international students, so it’s important to do your research on key university towns before making an investment. Click on the following link to find more information on where to buy student accommodation in the UK.
UK Student Rental Yields
The UK has some of the strongest PBSA rental yields anywhere in the world, sitting at an average of 4.72%. Research from UCAS shows us students are willing to pay more money for better quality accommodation, and with so few PBSA units on the market, it means that investors have been able to increase rents in line with demand.
In certain parts of the UK, investors are seeing rental yields as high as 10%. Below, we have listed the average student yields for many of the top university cities. However many of the opportunities Treo Investments are securing are bringing in above average returns:
- Manchester: 5.2%
- Cardiff: 5.59%
- Liverpool: 6.1%
- Leeds: 6.4%
To find opportunities that have even greater value, you should consult with UK student property experts.
Why You Should Invest in Student Accommodation in the UK
The UK has achieved more for PBSA investors than any other country in Europe. As it stands only the US has seen investments on a similar scale, but with the weakened pound rate and once-in-a-lifetime mix of political factors, the UK is proving to be the most profitable country to invest in.
International students come to the UK on an unprecedented scale, and with more English students opting to go into higher education, the demand from students for suitable accommodation will remain high for years to come. The only thing that needs to change is the supply of PBSA, which is something you can help with.
We will work with you to find the right investment opportunities. Our team prides itself on listening to what clients want from their investment.
If you are considering an investment in the student market, feel free to contact a member of our team. If you need more information on why you should invest in student accommodation in the UK, make sure to read our article: Is Buying Student Accommodation a Good Investment?