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Interest in student accommodation continues to grow

Student accommodation has had for a number of years a reputation of being run-down & squalid but with recent changes in the market, international investors are seeing something altogether more attractive.

Lincoln Student Property Block

Student accommodation has had for a number of years a reputation of being run-down & squalid but with recent changes in the market, international investors are seeing something altogether more attractive.

Russian tycoon Mikhail Fridman, a Canadian pension fund and other investors the world over have been pouring billions into the student accommodation sector in recent months.

University accommodation is now viewed as a lucrative asset class that can provide robust returns.

In the first five months of this year, £4.2bn was spent on student property and development sites, according to the property agent Savills. This trounces the £2.5bn invested in 2015 and is 40 per cent above the former record in 2012.

This is just the start, with prime developments being built in cities such as Sheffield, Bradford and Newcastle at present there is strong appetite from investors.

But exactly how has the market changed so much and what has made it so attractive to investors?

A recent survey by the UK’s largest student accommodation provider, Unite suggests the stereotypical students of yesteryear are dying breed.

The company surveyed a number of students for its Students Insight Report with 87% responding that they preferred a relaxed, quiet place to live. Just over half said nightlife was a priority.

With tuition fees now at £9,000 per year it’s easy to see why students appear to be much more focused on their education than in years gone by, and with this comes the need and want for high quality, all-inclusive accommodation.

From an investors perspective the high rents, low purchase price and thus high net returns coupled with the security provided by the high demand from students makes for a fantastic investment opportunity.

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