Student Accommodation Investment Yields

Student property is one of the best investments available at the moment. As a result, demand for student housing is increasingly high, leading to more and more purpose-built Student Accommodation (PBSA) developments being built to overcome an endless shortfall in supply.

This buoyant market has proven to be increasingly resilient, and in the past two years, foreign investors have almost doubled their market share. So to find out which areas of the UK offer the best opportunities for investment in the student market, we need to look at some prominent cities. We’ve compared some of the markets this year, and here are our 5 top student towns to invest in:

1. Plymouth

Plymouth, a port city in the southwest of the UK, is home to several well-regarded higher education institutions. The University of Plymouth is ranked in the top 2% of universities worldwide. It has a student population of around 23,000, with the university only able to house about 12% of them.

It is one of the UK university cities with a chronic undersupply of housing. According to JLL’s 2017 report, the coastal city has only 20 to 30 per cent of PBSA relative to its student numbers. Last year Plymouth University welcomed 23,155 students. Yet, the Complete University Guide notes that there are only 2,800 rooms available for students from Plymouth University.

However, thanks to the enforcement of Article 4 and an unyielding lack of previous developments, new PBSA developments like Beaumont Square can now cater to the hungry market. The lack of supply is a good sign for potential investors, as there is sure to be a constant demand for their property.

Student Population: 23,000
Amount of Housing Available Through University: 2,760
Potential Yields: 8% per annum

2. Huddersfield

The market town of Huddersfield in Yorkshire is currently seeing an enormous amount of investment. Most notably, the £74million regeneration of Kirklees College’s Waterfront Campus. It is just one of four excellent higher education institutions in the town, including the University of Huddersfield, named University of the Year in 2013! It has led to a student population of nearly 40,000 in the area.

But once again, a lack of suitable housing has proven to be a real issue for these young people, who must travel to their campuses by bus from 4 miles away. So a new PBSA, such as Crane Court – a mere 10-minute walk from Huddersfield University and right next door to Kirklees College – is proving popular with students and investors alike.

Student Population: 40,000
Amount of Housing Available Through University: 4,465
Potential Yields: 9% per annum

3. Bristol

The historic city of Bristol is a thriving place, full of creativity and popular with young people. It is partly due to the two prestigious universities it hosts. The University of Bristol is frequently ranked within the top ten institutions in the UK, whilst the larger University of West England boasts a 96% rate of graduates entering the workforce or further education within six months of graduating.

And between them, they have drawn around 50,000 students to Bristol. And the University of Bristol is hoping to grow its cohort by 3% this year, despite currently having housing available for just 6,000 students.

Bristol itself is becoming a major property hotspot thanks to being voted the best place to live in the UK (as per the Sunday Times 2017 poll) and prices rising faster than London in recent times, priming the local market for lucrative new PBSA investment. Upcoming developments, such as Tudor Hall, are well worth keeping your investor eye out for.

Student Population: 50,000
Amount of Housing Available Through University: 6,000
Potential Yields: 8% per annum

4. Liverpool

Liverpool is another place currently enjoying a powerful ‘hotspot’ status within the UK property market. Whilst it has long been a hub for creativity and investment, massive regeneration has spurred the city into a renaissance in the last decade. In addition, it has helped bring approximately 67,000 students to Liverpool’s higher education institutions.

Whether studying at the University of Liverpool, Liverpool John Moores, Liverpool Hope or even Liverpool Institute for Performing Arts (LIPA), students, particularly those coming from overseas, are increasingly looking to more upscale PBSA options for their housing. Developments such as Devon House, in the heart of the city’s student district, offer both residents and investors a promising prospect.

Student Population: 67,000
Amount of Housing Available Through University: 4,500
Amount of Total Student Housing Available: 17,857
Potential Yields: 8% per annum

5. Leeds

Top universities such as the University of Leeds, Leeds Beckett University, and Leeds Trinity University, alongside highly-regarded institutions including Leeds College of Art and Leeds College of Music, make Leeds an incredibly popular student city. With so many prestigious establishments, it’s not surprising that nearly 70,000 young people come to study in the city.

This blossoming student population has caught the attention of developers. It, in turn, led to Leeds becoming a popular choice for those looking to invest in PBSA. Viable city centre sites are now becoming particularly problematic, meaning demand from investors and tenants for new and existing developments has remained high.

If a new development springs up, it’s highly recommended to understand what it could offer. Depending on location and price, some resale options that come to the market are worth pursuing.

Student Population: 70,000
Amount of Housing Available Through University: 9,050
Potential Yields: 8% per annum

With the student property market proving to be such a lucrative and reliable investment in the current economy, these five areas of the UK offer some of the best returns for investors, producing average rental yields of around 7-8%. However, these cities are all still extremely undersupplied for student accommodation, meaning your investment will still be in continual demand for years to come.