Figures from the new CBRE student accommodation index report show the growth and returns on student accommodation are growing, demonstrating they are performing well for developers and investors alike.
The index shows capital values increased 6.5% in the year to September 2018, bringing total returns to 12.3%. Driven by capital value growth of 12.4%, Central London student accommodation annual total returns reached 17.5% for the year to September 2018, compared with 14.2% for the previous 12 months.
Large student accommodation properties (500+ beds) slightly outperformed medium (250-500 beds) and small (less than 250 beds) properties, with rental growth being stronger on properties located within 0.5 miles of a university.
A student satisfaction survey conducted by Knight Frank backs up these positive figures with over 76% saying they were happy with their purpose built accommodation.
There many advantages of investing in student accommodation, including good rental take up during term times but a lot of students pay for the whole academic year including academic holidays. The pool of renters is refreshed every year so the occupancy rates are high as most students need good quality accommodation near their university.
Developers are now realising the value of this type of project and look for sites for purpose built blocks or to renovate larger buildings within easy travel distance to the university.
As these can be quite large schemes, it’s important that developers work with an experienced broker such as Positive to help evaluate and fund the scheme. We can look at the whole market for finance and can also offer joint ventures as a way of funding the project.