JLL’s Student Housing team has projected rental growth of between 3-4% in London and 1-5% across the UK market for student property. Prime yields are also expected to remain robust, with good occupancy rates and attractive income growth for the 2016/17 academic year.
The Director of JLL’s Student Housing team, Huw Forrest, reports: “While it is too early to have definitive views on the impact of Brexit on the student housing sector, it is likely to remain more resilient than other sectors. This is due to the continued attraction of the UK university market, coupled with the depreciation of sterling, which will make the UK a more affordable destination to study for international students. It is also important to remember that EU students make up only 6% of students.
“We are currently seeing good levels of investment demand following the referendum and, generally, transactions we are working on have seen little impact as a result of the Brexit vote.”
JLL’s 5% rental growth prediction for student property is echoed by Jean Liggett, the CEO of Properties of the World, who believes that Manchester in particular will see such growth.
She comments: “The UK provides world-class education in a number of highly regarded institutes across the country. In fact, three of the top ten universities in the world are located in the UK. As a result, there will continue to be a growing demand for accommodation close to these universities, causing an increase in rents that will in turn provide higher returns for potential investors.
“What buyers like about this type of investment, post-Brexit, is the fact that they provide a fixed rate of return, have no extra costs during ownership and mitigate risk, subsequently giving them peace of mind. There will always be a high demand for good quality student accommodation. In our eyes, the sector will remain resilient.”
Manchester is already home to a booming student population, which is only expected to expand again this academic year. A spokesperson for the University of Salford states that it is expecting to see an increase in applicants for the start of the 2016/17 year.
Landlords, are you considering a student property investment? Remember that students can be some of the most reliable tenants, which is vital at this time of economic uncertainty.