Private equity firms pouring money into student property

A third of deals for student property in 2021 have been financed by private equity, compared to around 15% between 2016 and 2019, Jones Lang Lasalle research revealed.

Student application numbers are expected to rise by 8.5%, as people seek to have something of a normal student experience after the years we’ve had.

Investors are looking to meet this demand, as The Mistoria Group found that investor enquiries for student accommodation have surged by 23% over the past six months.

Investors now own 55,000 student beds, the equivalent of 8% of the UK’s total.

Mish Liyanage, managing director of The Mistoria Group, said: “Without doubt, the student rental market is the most financially lucrative for investors if it is managed well.

“However, if landlords fail to keep their finger on the pulse of an ever-evolving marketplace, they can easily fall into the trap of not planning properly, or using an inexperienced agent, which may leave them with costly void periods.

“Since 2011, student accommodation has outperformed all other traditional property assets and has been the strongest growing investment property market in the UK.

“It has also continued to be one of the most resilient investment sectors, with rental incomes and property values remaining stable, or increasing. The attraction of the student accommodation sector has been driven by structural undersupply and positive rental growth year on year.”

Offices, retail and hotels have all been badly hit by Covid-19, so it’s understandable for more investors to show interest in student accommodation.

There’s a need for more student accommodation.

The sector requires a further 310,000 beds to cater to all first year and international university students, who typically live-in purpose-built accommodation, research from student accommodation provider Unite Group Plc revealed.

Construction is failing to put a significant dent in that gap, so there’s likely to be strong demand from students in the years ahead.

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