Is student property the place to invest in 2016?

 
Is student property the place to invest in 2016? [Photo: gpointstudio via iStock]

Student property has become one of the most popular ways to invest in recent years, with the swell in the number of students in the last five years in particular, and the inability of universities to cope with the demand this causes for accommodation, meaning there are real opportunities for buyers to make strong returns on property. 

In 2013 student property passed the £3 billion investment level for the first time ever, before it matched this in the year following, and then almost doubled this total last year, coming in with some £5.7 billion worth of investment in the space of just 12 months. 

And now, with just a few weeks until students up and down the country start to head back to towns and cities for university and the new academic year, is it the right time for people to put their money into student property? And will this year be as strong as an investment proposition as we've seen in the last few years? We take a look at a few key points from the student market and predict how things might go in 2016.

Brexit-proof

One of the biggest benefits of student property this year in particular is that it has the ability to be resilient to political uncertainty like the Brexit vote. While other areas of the property market may be suffering a slight fall in demand since the referendum, student property is not likely to, according to JLL.

Its director of student housing Huw Forrest said: “While it is too early to have definitive views on the impact of Brexit on the student housing sector, it is likely to remain more resilient than other sectors. This is due to the continued attraction of the UK university market, coupled with the depreciation of sterling, which will make the UK a more affordable destination to study for international students. It is also important to remember that EU students make up only 6% of students."

Strong returns

Not only will student property be resilient in the face of political uncertainty, but JLL has predicted that returns will rise this year for landlords in the sector, which is not as likely in other areas of the rental sector, making student property a viable option for those looking for a portfolio that will grow and become more valuable within the space of the next 12 months. 

JLL's predictions for the year ahead show that the company expects to see student property returns grow by between one and five per cent across the country as a whole, and between three and four per cent in London as a record number of students start coming to universities across the country. 

Low entry point

At a time when people are worried about the potential for recession in the UK, the reality is that a lot of investors might not want to spend big. However, one of the real benefits of property in the student market is that it offers the chance to get onto the rental ladder with a low entry point, meaning there's far more potential for growth without having to shell out as much as you would elsewhere. 

Student flats tend to be smaller than mainstream private rented sector accommodation, and are often located away from the more popular areas of towns and cities, which means there's far more likelihood that investors will be able to get their hands on property in this sector at an affordable price than they would elsewhere.