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In recent years, purpose-built accommodation has become highly sought after in the investment arena with commentators going so far as to qualify the spe-cialism as a mainstream asset class.
According to CBRE, student accommodation delivered returns of 9.4% within one year in September 2019. The growth of this area is tied to the UK’s reputa-tion for education and therefore has the benefit of being a generally stable investment. With over 2 million students in the UK, this is an area that has sig-nificant potential for rental growth.
What is purpose built student accommodation?
PBSA is a unique development in the United Kingdom which takes the form of cluster flats or studios. Private developers build the units catering specifically to student cohorts. Each site is therefore comprised of ensuite and non-ensuite ooms with a shared kitchenette and facilities like gyms, common living spaces and games rooms.
With the UK’s reputation as a hub for quality higher education, international students have flocked to the capital for decades which has placed a high de-mand on affordable student housing.
To a large extent, overseas intake was made possible through increased mo-bility and flexibility afforded to students within the European zone. Amongst universities, there is a large presence of students from the Asia Pacific region which has also attracted foreign investment from those same areas.
Despite the growth in this area, research suggests there is still a shortfall in the availability of units. According to JLL, more than210,000 full-time students were unable to obtain accommodation last year.
At the beginning of the year there were growing fears that lockdown would see a steep decline in occupancy rates across the country. Fast-forward seven months and that fear has been realised. With thousands of students returning home and lectures being delivered online, investors would be right to harbor anxiety about the future of PBSA schemes. Despite this, commentators remain positive about the outlook for 2021 with surveys showing a strong appetite for A-level students to continue higher education.
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