Recent research shows that investment in student property has surged in the UK and across Europe year-on-year, as investors increasingly shift towards alternative sectors that offer income stability even in an economic downturn.
According to Savills’, exceptionally strong investment activity was recorded in the UK, up 84% year-on-year to £5.5bn (€6.2bn). Savills also forecasts that 2020 will continue to see rocketing investment volumes, with growing interest in the industry across the UK and Europe continuing to push specialist developer owner-operators towards new developments.
These growth figures are supported by investment property experts, Mistoria Group, which has seen demand for student property in the North West rise by 8% year on year. The largest increase in investment came from Turkey which accounted for 20% of the growth, followed by UAE (14%) and Hong Kong (11%).
Mish Liyanage, Managing Director of The Mistoria Group said, “Over the last 12 months, we have seen a sizeable increase in international investors’ appetite for student accommodation. They are attracted to the UK because of the relatively low-cost student property on offer and the excellent net yields that range between 12% and 15% in the North West.
“Higher education is a worldwide demand and universities in the UK offer some of the best courses. Towns and cities near universities have seen rising demand and hence student housing demand is high. Student buy-to-let investments – particularly HMOs – offer an excellent return on investment.
“An HMO property with a superior spec can deliver investors an average gross rental yield of 18%, leveraged return on investment of 38% plus, before any charges and voids. A three bed HMO which houses three students, can be bought from £120,000 upwards in the North West. The return on investment is very attractive too, with 13% (8% cash rental and 5% capital growth). The gross rent on the property will exceed £1,300 pcm, as each room is rented out.”