Knight Frank forecasts 9.2% annual returns from UK student accommodation investment
22 April 2013
Knight Frank today releases its forecast for the student accommodation sector, showing a continuing positive outlook for the market.
Over the next 12 months the average blended UK investment return is projected at 9.2%.
This reflects an increase of 0.4% on London returns to 9.1%, due to rising rents in an acutely structurally undersupplied market. Average rents are forecast to rise 3% in London and 2.75% in the regions from September 2013.
James Pullan, head of Knight Frank Student Accommodation, says, “Student property is one of the most successful real estate asset classes, thanks to stability of demand for student bedrooms from all over the UK. The market is still structurally undersupplied in all core University cities.
“Student accommodation is a mid- to long-term investment play with current access to stock relatively limited, and the sector dominated by specialist providers and funders. There are barriers to entry for new operators, although a significant volume of new equity is entering the sector, looking for opportunities in the current refinancing climate.
“Knight Frank forecasts a combined London and regions investment return of 9.2%, higher than most other asset classes. This positive outlook is down to several factors: continued steady rental growth in all key English university towns, continuing undersupply, and the established perception of the UK as a top global knowledge centre.
“Other things we cannot ignore in the year ahead include significant volume of product entering the market – we are already seeing substantial equity, most of it international, chasing these assets – and the first student property REIT recently launched and already finding keen interest in the UK and overseas.”
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Notes to Editors
Knight Frank LLP is the leading independent global property consultancy. Headquartered in London, Knight Frank and its New York-based global partner, Newmark Knight Frank, operate from 244 offices, in 43 countries, across six continents. More than 7,067 professionals handle in excess of US$817 billion (£498 billion) worth of commercial, agricultural and residential real estate annually, advising clients ranging from individual owners and buyers to major developers, investors and corporate tenants. For further information about the Company, please visit www.knightfrank.com.