International students boosting investment
The UK higher education sector has been a magnet for both overseas students and overseas investors. The UK is home to some of the world’s best universities and the country’s prestigious reputation for higher education continues to attract people from all over the world.
According to the 2017 Universities UK Report, 14% of undergraduate students, 38% of postgraduate students and 29% of academic staff were from outside the UK. The UK attracts more overseas students than any country other than the United States, cementing its reputation for world-class education. Oxford University is currently ranked number one in the world, and Cambridge is second, with British universities occupying the top two spots for the first time in decades. For many wealthy families, a British education is a worthwhile investment, and as their children move to the country, they are more aware of the obvious need for student property.
By looking at where students are coming from, links with the sources of investment in student accommodation are obvious. In 2015-16, 92,215 students came to the UK from China, which has already heavily invested in UK property. Nearly 6,000 Canadian students were studying in the UK in the 2015-16 academic year. At the same time, The Canadian Pension Plan bought Liberty Living, a student housing company which has 16,000 rooms and more than 40 student halls in the UK, for £1.1 billion. A further 17,405 Malaysian students chose to study in the UK, closely followed by 17,115 students from the United States, another country which has invested in UK student accommodation.
The international appeal of a UK higher education is one of the biggest driving forces in the UK’s student property boom. International students are expecting a higher standard of accommodation than what was previously on offer and the development dedicated purpose-built student accommodation (PBSA) has been steadily on the rise. Often opting for studio apartments, with a greater level of privacy, international students are choosing high-end self-contained properties in convenient city centre locations.
Student property is also becoming more luxurious, with high end features like on-site gyms, 24-hour concierge services and even free coffees prepared by artisan baristas. Student property developments like those by RW Invest offer investors the chance to make the most of this growing market, with rental yields up to 8% and high-end properties students will pay a premium for. With student rentals rising by almost a quarter in five years, the sector’s high growth is providing investors with excellent returns.
International students often come from wealthy families who are willing to invest in a British education. This also means that they are willing to spend more on high-end accommodation. Tuition fees for overseas students are often double those of domestic students, meaning that extra spending on accommodation is insignificant. Many students say that a calm and quiet living space is conducive to their studies, especially compared to the cramped house shares of the past.
Overseas investors are seeing student accommodation as a steady and reliable source of income, with continued growth and a consistent demand. With the uncertainties of Brexit and recent tax changes affecting other investment categories, student property is even more appealing. Large international investment firms are buying up whole blocks of student accommodation in the UK, confident in the returns and increasing value of their property acquisitions.