Overseas investors are stepping up their interest in UK student accommodation, new figures show.
James Pullan, the head of student property at global property consultancy Knight Frank, has revealed that demand for investment in student accommodation is currently stronger than it has been for years.
Last year, £3.1bn worth of student halls were sold – more than double the amount traded in 2013 and 2014. All five of the biggest deals – worth a combined £1.5bn – were sold to overseas investors.
“They [investors] have seen how much others have made from student housing and want to join them,” Pullan said. “More than 70 per cent of investment is coming from overseas buyers, from sovereign wealth funds and ultra-high net worth individuals [people with investable assets of more than US$30 million] and private equity.”
The increase in interest in student property is part of an overall trend that is seeing more buyers entering the UK property market for investment purposes, rather than looking to buy a home in which to live in.
In fact, recent research from Barclays Bank predicts that high net worth millennial investors and buy to let investments will lead the way in fuelling the property market in the coming years.
The research reveals that younger investors will be a key driver in the growth of the UK property market over the next three to five years, and that many of these investors will own more than one property.
Interestingly, this new breed of investors will likely shun the traditional investment hot-spots of London and the South East for cheaper options elsewhere in the UK. The north of England and the Midlands are set to become particular property hot-spots in the coming years.
It is estimated that this surge in buy-to-let investments could push average UK property prices to almost £300,000 by 2021 – a 6.1 per cent increase over current levels.
The buy-to let surge started late last year when, post-Brexit, many overseas investors took advantage of the weak Pound by purchasing property in the UK. Manchester, and other north-western areas, became a particular focus for these investors.
Article published 31st May 2017