Newcastle student accommodation sold in £7.5m student property deal

A 1930s office block in Newcastle city centre has been acquired by a student property company in a deal worth £7.5 million.

The largely unoccupied office block will be converted into a student development which will contain 63 self-contained studio suites.

Record investment in student property

2015 marks a year of record-breaking investment in the UK’s student property market.

According to the latest report from the property experts at CBRE, the UK’s student accommodation sector has seen investment levels almost double what was achieved in 2014 in just 6 months.

The company’s data shows that in the first half of 2015, £3.98 billion has been invested in the student property market. In 2014, £2.9 billion was invested in student housing.

Jo Winchester, head of student housing advisory at CBRE commented:

“So long as demand outstrips supply, upward pressure on both rents and capital values will continue to make the market an attractive proposition for investors, and we don’t expect the market to come off the boil for some time.

“Although there are differences between residential and student accommodation operational models, some larger student housing operators and investors in the sector are beginning to explore build to let development and investing in the private rented sector. As this happens, it is possible that the operational models could become more closely aligned.”

A lower entry level is generally required for investors to branch out into the student sector. Less capital allows investors to help spread the risk of their investment and to expand their portfolio without tying up all of their money.

The sector generally offers higher yields than residential buy-to-lets and as many students pay for their accommodation upfront, investors typically see the market as low risk.

Newcastle is a bustling university city which offers students a vibrant social life as well as some top courses.

Investment in the city’s student accommodation may continue to rise if student numbers in the city continue to expand.