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CB Richard Ellis
Student Housing Investment
University Accommodation Investment
CB Richard Ellis has just released its latest report into UK student housing investment, and it makes for very positive reading indeed. According to the data investment in student housing has increased by more than 120% in the last year. The report shows that £750m was invested in student housing in the UK in the 9 months ending September 2011, which is over 120% more than the £350 million invested in the whole of 2009.
Apparently investors were not concerned by the significant rise in tuition fees that came into effect this year. CB Richard Ellis shares their optimism in this sense, despite the fact that UCAS figures for 2011 show a 15% drop in UK applicants and a 13% drop in EU applicants (fuelled mostly by a 20% drop in applications from Ireland).
While these figures "seem significant" according to CBRE, when viewed against "a backdrop of intense competition for places" they become much less worrying. In fact, according to CBRE - based on the fact that 210,000 applicants missed out on places last year - "applications could fall by 30% before it becomes an issue".
Other evidence in the report might also explain investors confidence. November's UCAS figures show a 12% growth in applications from outside the EU, with a 32% growth in applications from Hong Kong. On top of that private rented accommodation is still the top choice among students, with 27% of all students opting for this. As a result occupancy remains high at 99% in 2011 according to CBRE, with rental growth also being strong at 4%.
So despite the fee increases we can see why there has been such a growth in student accommodation investment, although it is also undoubtedly as a result of its raised profile and increasing supply becoming available to private level investors. According to CBRE though, while overall investment has grown, the focus has increased greatly on security, with investors (and lenders) increasingly looking for pre-let agreements with good universities.
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