There is still room for further property investment in Nottingham's student accommodation sector, according to one expert. Matthew Robertson, associate director at the Nottingham offices of Jones Lang LaSalle, told the Nottingham Post that with 50,000 students, opportunities abound in the city.
Over the last 12 months, proposed conversions of offices into student housing outstripped all other uses. During 2012, 275,000 square feet of legal exchanges/completions were submitted for this purpose, while offices acquired for business space added to 240,000 square feet. Jones Lang LaSalle claims this is because office rents and capital values in Nottingham are low against student rents, the newspaper reported. This means the commercial value of transforming office space into student housing is high.
This is compounded by the strong performance of student accommodation nationwide, delivering total returns of between 11 to 15 per cent. It is widely regarded that unlike other markets, which can be unpredictable, student accommodation offers a relatively steady income, room for growth, and high occupancy rates. It's also less cyclical in nature, meaning there will be less fluctuation year-on-year.
Mr Robertson explained to the Nottingham Post that the city has been targeted as one of the top UK locations for regional and national student developers and operators. This is thanks to to the presence of two pre-eminent universities in the city and Jones Lang LaSalle has been just one developer taking advantage of new opportunities. It has completed or put under offer buildings in the city that will deliver approximately 550 student beds.
"There are real opportunities in the city to stimulate growth through redevelopment of obsolete buildings, creating sustainable new environments which are more easily managed and policed," Mr Robertson told the newspaper. "There is evidence that students are more attracted to living in the city centre, which in turn brings further spending into the local businesses and nightlife."
He added that converting obsolete buildings into student housing will also increase the availability of traditional homes. This will release property to be used as family homes, which are currently in shortage in the city.
Sheffield is another city being targeted by developers for student accommodation and Knight Knox International has announced it will launch boutique housing in Kelham Island. The site will offer 18 townhouses, providing 80 students affordable, private accommodation, designed to a high standard.