In its latest research publication, international property consultant King Sturge predicts that London's student accommodation market will be property's star performer. "London Student Accommodation 2009" reports on a sector that is expected to show rental growth in 2009 and constitute a key investment opportunity, at a time when UK property presents challenges to investors.
"This sector of property is bucking the trend." says Huw Forrest, Partner, King Sturge. "There is a major imbalance between demand and supply of private sector student accommodation. From the 250,000 students in full time higher education in London, only 1.5% can access commercially operated private sector accommodation" says Forrest. "And in our opinion 50 to 75% of university housing stock is out-dated by modern standards. There's an urgent need to build more and the time is right for both developers and universities."
Reduced land values have created an opportunity for specialist developers, operators and investors in the sector of student accommodation. "Land that would otherwise be out of reach is now better value" added Forrest, "We expect to see more strategic joint ventures being formed between existing UK operators and overseas investors as traditionally, there are a number of barriers to entry into this sector".
The number of students choosing to study in London is rising; but this is not only a domestic (UK) trend as the capital's universities increasingly attract foreign students.
This sector of the property market could also attract overseas investment. "The continued depreciation of the Sterling against the Euro and the US dollar has made the UK more attractive to foreign investors" adds Huw Forrest. "In the past we have seen investors such as GIC form JVs with the Unite Group in the UK and I believe we will see other similar partnerships in the sector."
King Sturge's specialist student accommodation consultancy team is the largest in the UK and in 2008 the firm advised on over £2.5 billion (approx. 2.7 bln.) of student accommodation.
Source: King Sturge