BIG OPPORTUNITIES FOR INVESTMENT IN THE STUDENT ACCOMMODATION SECTOR

Whilst the traditional, mainstream property investment categories such as retail, industrial/warehousing, offices and residential buy-to-let receive most of the focus when investors are planning where to put their cash, a healthily diverse portfolio will increasingly embrace alternative types of property – and in Norwich that often includes student accommodation, writes Guy Gowing.

This market has snowballed in recent years, as our further and higher education institutions have grown both in terms of reputation and student numbers.  The University of East Anglia how has over 19,000 students enrolled (an increase of 5,000 over a decade), Norwich University of the Arts has just under 3,000, and City College more than 10,000.  That means that more than 30,000 students from these three institutions alone are all seeking somewhere to live, ideally close to their places of study.

This huge explosion in student numbers in the city has seen a plethora of large-scale speculative accommodation developments, including Pablo Fanque House in All Saints Green, Crown Place on Surrey Street, Benedict’s Gate, and most recently St Crispin’s House on Duke Street (not originally designed exclusively for student accommodation, but occupied by 170 students this year at least, as a result of structural problems at the Ziggurats and other accommodation at UEA).

Despite this increase in supply, there is still a healthy demand for places for students to live, and opportunities for investors to get involved in this market.  For example, we have just sold two bespoke developments, built around 20 years ago, one offering 11 five-bedroom houses close to the UEA, and the second eight five-bedroom houses on Dereham Road.

These were properties which were developed speculatively by a private investor, and which were being sold on for family reasons.  The fact that the two properties together sold for around £5.5 million shows that investors still believe a decent return is very achievable in this market.

There have been some commentators who have suggested that the student market is becoming saturated, but with buoyant demand from young professionals and families for rental properties in the city which might in previous times have been let to students, the traditional supply routes for students lets (terraced houses in the Golden Triangle, for example) are much diminished. 

As long as the mismatch between supply and demand in the general residential lettings market continues, the need for bespoke student accommodation will remain.

Another often-overlooked factor in the attractiveness of investment in student properties is that fact that every year a new cohort of potential tenants arrives, more or less guaranteeing a constant demand for accommodation.

As with any specialist types of property investment, choosing the right property and ensuring it is professionally managed is crucial, and as ever seeking expert advice is essential.