Welcome to the Experience Invest property blog. Experience Invest is a London-based property consultancy that focuses on sourcing and developing real estate opportunities across the UK’s top performing asset classes. In today's post we talk about the new research from Savills which highlights the growth of the student accommodation sector in recent years and provides insights into how the market could develop in the coming years. 

For investors looking to make healthy, reliable returns from UK property, it has become increasingly clear in recent years that few asset classes offer greater potential than student accommodation. Some of the most significant current trends in this market were explored in a recent study by Savills, which noted that student accommodation “has evolved from an alternative asset class into a mainstream investment”.

The growth of student accommodation

 Once viewed as a niche market, student accommodation is now a viable and highly attractive prospect for investors from all over the world. Investors currently seeking opportunities in this segment are benefiting from more choice than ever before. Knight Frank recently published an update highlighting the growth in the UK student property development pipeline, with the number of bed spaces due to be added in the 2019-20 academic year 25 per cent higher than the previous year. 

The hard data

In 2018, student housing investment volumes across the globe reached $17.1 billion (£13.1 billion) – the third year in a row the total has surpassed $16 billion. While last year’s figure was marginally down in 2017, it was 425 percent higher than the amount invested in student accommodation back in 2008. The data also provided detail on the provision of purpose-built student accommodation in key locations, revealing that the UK is one of the best-supplied markets. The 625,000 available beds, compared to the country’s population of approximately 1.9 million full-time students, means around a third (34 per cent) of people studying in the UK have access to dedicated bed spaces.

The global picture

The UK, Australia and the US play host to the largest numbers of overseas students, with British colleges and universities witnessing an eight per cent increase in international enrolment between 2012 and 2017. Recent signs indicate this is likely to continue in the near future, with the British government publishing its new International Education Strategy, with the aim of increasing the number of overseas applicants studying in the UK by more than 30 per cent.

Education secretary Damian Hinds said: “The UK’s education system is world-leading and its reputation is the envy of many countries around the globe. As we prepare to leave the EU it is more important than ever to reach out to our global partners and maximise the potential of our best assets – that includes our education offer and the international students this attracts.”

The future?

UK student accommodation is clearly going through an exciting phase of growth, offering more and more opportunities for investors to secure returns.  Savills’ outlook for the sector highlighted the possibility of strong competition for international students in the coming years, with countries like the UK, Australia and the US offering incentives such as post-study visa extensions to attract applicants from overseas. The company also discussed the ‘middle-tier’ segment of student accommodation and how it could be a source of growth in the future. To date, developers and investors have focused on the premium end of the market,” it said. “There exists significant potential in serving the middle tier between low-quality university stock and new, premium product.”