Following the UK’s Brexit result in June 2016 to leave the EU, there has been no effect on student accommodation investments. In fact, 2016 saw the UK achieve its second highest ever investment volume in purpose-built student housing. Figures showed $5.84 billion (£4.5billion) ploughed into the student housing sector as well as three of the world’s five largest individual student housing investment deals over the past 18 months taking place.
Initially, there was naturally some uncertainty surrounding the housing sector after the unexpected decision of Brexit. To date no negative impact has occurred within the student housing market. To those outside the industry, this may be a little surprising. There were concerns regarding the continuation of European research funding to UK universities after Britain leaves the EU and its potential appeal to foreign students. Would international investors still commit to UK student housing?
The good news is that many international investors continue to view student accommodation as a viable investment opportunity with strong returns. After June 2016, investment in the UK purpose-built student housing has remained buoyant both with UK and overseas investors despite falling volumes in other areas. Indeed, as student numbers in the UK increase, so do the demands for high-spec living quarters with plenty of mod-cons.
The student housing market regardless of the UK’s decision to leave the EU, is still in high demand. Investors in the UK as well as overseas are willing to pay the premiums for larger portfolios. This is driven by their need to allocate the investment capital and build scale quickly. The questions and fears around the Brexit result may have left some investors feeling a little lost while discouraging new investors from investing in PBSA. Recent research has shown how such fears are misplaced.
Purpose-built student accommodation (PBSA) is one of the best investments in the UK for residual profits and long-term returns. Even with the current worries and uncertainty of Brexit, the number of students applying for university places are holding steady and increasing in some sectors, especially international students from overseas.
When it comes to international students, many have found their money goes further in the UK than before. They have not been deterred from studying here which has resulted in student housing occupancy rates and income remaining high. Quite simply, higher student numbers mean there’s more demand for accommodation and more investment/profit opportunities for landlords.
Students now expect more up-to-date and luxurious accommodation than in the past. Purpose-built student accommodation is increasing in popularity with extra facilities and amenities like common rooms, laundry rooms, gyms and en-suite bathrooms. This means that they are much more likely to be prepared to spend more money on rent for better quality rental housing.
Many universities around the UK are struggling to provide their students with university-owned campus accommodation. With this in mind, landlords should be looking to invest in student accommodation and housing. The current student accommodation demand is a golden investment opportunity for established and potential landlords to make money.