Student lettings are in a class of their own

Student lettings are in a class of their own

14:19 PM, 3rd December 2010, About 13 years ago

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Business is booming for student landlords as rents, property values and returns are all increasing.

The average student landlord benefitted from a 13.5% return on investment in the year ending September 30, reports estate agents Knight Frank in their annual student property survey.

This is despite a slight fall in yields – down to 6.25% from 6.56% – mainly due to a slight fall in rents in London.

Overall, the results for student landlords showed:

  • Average rents rose 2.2%
  • London rents decreased by 3.6% but rents for regional cities were up by 4.1%
  • Yields stand at 6.00% in London and 6.5% elsewhere
  • Total returns (income and capital value growth) are an average 13.5%.

James Pullan, Knight Frank’s head of student property said: “Student property has delivered consistently healthy returns over the past five years. The sector avoided the crash in both capital values and rentals seen in the wider commercial and residential sectors in 2008 and early 2009.

“Rents have continued to rise into the 2010/11 academic year, reflecting the strong demand for accommodation from a rising student population, but also the ongoing process of improvement and enhancement being undertaken by the student accommodation operators.“

“Full occupancy is a characteristic of the sector.  In the regions outside London, rents have risen by around 4.1% over the last academic year. In London, we have observed some pressure on the high end stock which has resulted in an overall fall of rents this year.”

Knight Frank expects the general outlook for rents next year is more growth driven by the continuing under supply of accommodation.

Corporate developers are likely to change strategy and put new halls by transport hubs so students can travel to a choice of universities rather than tie developments to a specific campus.

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