Nearly £840 million (approx. 1 billion) of capital has been committed to investment and development in the student accommodation sector in 2011, new research of CBRE has revealed. This is more than double the £350 million allocated to the sector in the whole of 2009.
Student accommodation has proved popular with investors attracted by the stable annual income and positive yield movements over the course of last year. Rents have grown by 4% regionally and by nearly 5% in London during 2011 with occupancy rates currently at around 99% on average.
CBRE anticipates that rather than leading to an overall decline in student numbers, substantial increases in higher education fees will drive a shift in the type and composition of the student population. Overseas students will play an increasingly important role in UK higher education international student numbers anticipated to increase by an average of 3 - 6%.
Jennet Siebrits, Head of Residential Research, CBRE, commented: "Any uncertainty in the wider Higher Education market is not reflected in the accommodation sector and we expect the strong rental growth to continue next year.
"Student accommodation is more attractive than many other asset classes in the current climate and we have seen increasing interest from relatively new parties seeking to diversify their portfolios. While investor appetite will remain strong next year, it is narrowing its focus on well-located schemes that have long-running agreements with good universities."
The private rented sector still houses the highest proportion of students at 27%, followed by institutional halls and students' families both of which house 19% of the population.