Has Brexit affected the student property market?
Purpose built student accommodation is one the best investments in the UK for residual profits and long-term investments. However, during the EU referendum in June 2016 uncertainty arose as to whether the market would become hindered during a time of economic instability. Leading investors in student accommodation began to re-evaluate the market. An exit from Europe would presumably alter tuition fees for EU students, leaving off putting increases in tuition fees which could drastically decrease the UK’s desirability as a higher education destination.
Fears had circulated that foreign investors would exit the UK market. However, the threat of a mass exodus failed to materialise, leaving the student accommodation market as fruitful and robust as it was before. It has since gone on to achieve its second highest ever investment volume in purpose-built student housing at £4.5 billion.
photo/ DANIEL DIAZ via pixabay
Despite applications for university places nosediving since the Brexit result – applications from students both in the UK are down 5%, and overseas students applications have decreased by 7.4% – this has not affected the incessant demand for student housing as a major shortage of suitable housing is prevalent in many thriving UK cities. A flourishing population has inflicted a strain on the housing sector. Student numbers have grown by nearly 800,000 over the last two decades resulting in approximately 1 in every 3 people aged 18 to 24 in full-time education. However, the construction of purpose-built student accommodation hasn’t kept up with the escalating figures.
The proportion of non-UK students living in purpose-built student accommodation rose from 4.3% to 10.8% in the six years leading up to 2014. Today’s reality is that higher education from the UK stands as an attractive prospect that is well respected overseas, and due to the deterioration of the sterling’s value, tuition fees and living costs have never been so appealing.
Student accommodation was coined a ‘truly global asset class’ at the Student Housing 2017 conference in London as wealthy businessmen and state-owned investment funds are increasingly undeterred by the Brexit vote. Instead, focus is placed on what is shaping up to be a robust and increasing demand for new build units to provide students with a higher standard of living.
For many years, the reputation of student accommodation failed to conjure connotations of luxurious living. Instead, the view was of tatty rooms and dimly lit corridors that failed to satisfy the needs of its tenants. But now, rents for this newly revived quality of housing are keeping up with, and regularly exceeding, levels paid by professionals and other tenants towards the higher end of the market.
By raising the desire to obtain somewhere more modern, convenient and well equipped, this has created a new generation of student accommodation. Desirable amenities such as on-site gyms, communal gardens and roof top terraces can be found across a plethora of student builds around the country.
RW Invest, property specialists based in Liverpool, offer a lucrative range of buy to let developments covering many UK investment hotspots, with rental yields and capital appreciation opportunities remaining resolute after the EU referendum.
Author: Zoe Price
