Will rising student numbers make London a better option for student accommodation investment?
A new report shows that the number of students in London is expected to increase by 50% over the next 10 years.
Student accommodation investment is expected to triple in growth to reach an astonishing £5.7 billion before the end of 2015.
The sector has witness a steady amount of growth over the last few years with investment up from £500 million in 2010 to £3.8 billion in H1 2015.
Philip Hillman, chairman of JLL’s Alternative Division, commented: “We have seen extraordinary growth in UK student numbers over the past 20 years and while UK student numbers are now stabilised, international student numbers set to rise dramatically in the next decade.
“The provision of good quality student accommodation was traditionally the responsibility of the universities but in recent years, most new accommodation had been provided by private investors and developers.
“The Gross Value Added supported by student spending throughout the UK is of the order of £25 billion per annum. This represents 1.03% of UK GDP. Put in perspective, this figure is equivalent to one third of the total contribution of the aviation sector to UK GDP,’ Hillman added.
But does rising student numbers in London mean that the city is a good location for student accommodation investment?
London is a top destination for students however, investors way wish to look to other university towns and cities to achieve a higher yield. Although many students are paying through the roof for their accommodation – one student was recently reported spending £21,000 per month on a London student flat – the higher entry level nature of the market means that investors receive lower returns.
A UK Student Accommodation Investment Guide shows that investors should look to cities such as Liverpool, Manchester, Newcastle, Leeds and other top cities to achieve higher returns.
London will always be thought of as a location for academic excellence however, landlords looking to excel through student accommodation investment may wish to look elsewhere to secure better returns.