Why Is Investing in Student Accommodation a Good Idea?

Despite economic pressures caused by Covid-19, student accommodation investments reached a record high in 2020.

According to a report from property experts Savills, investors spent a whopping £7.8 billion in the PBSA sector last year – up by 89% on 2021.

Looking at how much was invested in UK PBSA, it’s clear that investors from across the world as still confident in the UK sector’s ability to provide attractive returns for the foreseeable future.

Savills also notes there is likely to be continued investor appetite for PBSA in the coming years, with a recent European Living Investor Survey finding that around two-thirds of investors are expected to deploy more money into PBSA over the next three years.

In the 2021/22 academic year, over 628,000 full-time, first-year students started an undergraduate degree – the second year in a row to have over 600,000 new starters.

Analysis of the UCAS application and acceptance data indicates this trend is likely to continue, with 618,000 starting in 2022/23 and 622,000 in 2023/24

There is continued growth expected in the number of applicants, with UCAS predicting almost  1 million university applicants in 2030.

This is great news for those investing in PBSA. As the number of students continue to grow, the demand for accommodation will skyrocket alongside it.

Between 2019/20 and 2021/22, the number of full-time EU students fell by -26,690, while non-EU international students rose by 144,175.

This is significant for investors as non-EU students are far more likely to rent in high-quality, purpose-built student accommodation, typically because they have wealthy parents.

There are around 130,000 applications from Chinese students, who are 2.2 times more likely to live in PBSA than UK students.

Likewise, applications from USA students have increased by over 60%, who are 1.9 times more likely to live in PBSA.

This increase means PBSA can be an even more lucrative strategy for investors, particularly those focusing on Liverpool and Manchester.

Both cities, located in North West England, have a huge Chinese student population, with one in five students in the University of Liverpool being Chinese.

For that reason, if you are eyeing up the most lucrative opportunities for purpose-built student accommodation, then these two cities are excellent choices.

You can check out our dedicated guides to student property investment in Liverpool and student property investment in Manchester by clicking the links.

A big factor being the record-breaking growth seen in the UK property market has been a lack of supply.

A report in May 2023 from Rightmove found that there is currently the hottest-ever competition to buy properties, with buyer demand 3% higher than in 2019.

This short supply has also been seen in the student property market.

There are currently over 2.4 million students in the UK, according to UCAS, with a further 500,000 on the way by 2030.

The UK market is unable to keep up with this demand, with the latest figures suggesting that full-time students outweigh PBSA by 3:1.

Universities own around 70% of the UK’s PBSA, meaning they are now relying on private investors to help deal with this demand and increase the available supply of high-quality dwellings.

For this reason, there is an excellent opportunity for investors to make a truly lucrative investment in 2024.

Before investing in student property, you need to decide how to invest.

There are currently two popular ways you can start investing in student property, either with an HMO or purpose-built student accommodation.

HMOs, otherwise known as Houses of Multiple Occupancy, were previously one of the most popular forms of investment due to many second and third-year university students opting to live there.

However, a culture change amongst students that saw demand rise for high-quality modern furnishings has seen PBSA skyrocket in popularity and HMOs fall behind.

HMOs are also subject to stringent laws and legislation that differ between local authorities, making it a confusing investment for beginners.

For this reason, the likely best investment choice in 2024 is PBSA.

As mentioned, student appetites for property have changed, with an increasing amount opting for more high-quality furnishings.

In 2024, many premium student developments come with extra facilities, including gymnasiums, security, and even cinema rooms.

It’s a good bet to invest in a development that supplies these high-quality facilities to ensure you attract as much interest as possible.

If you want to find and buy student accommodation investments, be sure to click the link to see the latest releases from RWinvest.

To make the most lucrative student property investment as possible, it’s crucial you invest in a city with high student numbers.

Naturally, the higher the number of students, the more in-demand properties will be, which will have a positive impact on your potential returns.

To identify a student city, it’s a good idea to look at employment opportunities on offer, nightlife experiences, the quality of universities, and the graduate retention rate.

All these factors together will create a thriving student scene for years to come, which will guarantee the future safety of your investment.

It’s also a good idea to invest in accommodation that is located nearby to transport links, shops, nightlife, and a university. This will also ensure you generate as much interest as possible.