BY LISA BATHURST
This is an exciting time of year for teens finishing grade 11 and matric, as they decide on what they want to do after school. Where they want to study, locally or internationally, and which universities to apply to? For parents hoping to send their children abroad, this is a good time to consider investing in an international property asset.
The UK, with its excellent universities – from Oxford and Cambridge to the universities in Sussex, Leeds, Liverpool and Newcastle – is one of the most popular destinations for international students. There are more than 60 university cities and towns around the UK, and as the medium is in English, the currency is stable, and safety is not a concern, it is an increasingly popular destination for South African students.
“The UK has seen record intake numbers of foreign student for the last four consecutive years,” says international investment property specialist and founder of Hurst & Wills, Lisa Bathurst. “This growth shows no signs of slowing down with the weakened sterling making it more alluring for international students and their parents. For the fifth consecutive year, a record number of non-EU students have applied to study in the UK. The British Council predicts that the pool of global ‘travelling students’ will double to eight million by 2025, with Britain set to attract more than the US.
To add to the appeal of excellent university choices in the UK, there are also affordable and good investment opportunities in UK property market. Student accommodation – known as purpose-built student accommodation (PBSA) – is thriving in the UK. It is the UK’s highest yielding property asset with the total investment in the sector increasing consistently over the past few years. In 2015 this sector overtook the US as the largest student property market,” says Bathurst.
“It is an affordable investment, for as little as R1.3m, you can own a full title offshore student studio apartment,” says Bathurst.
The two main types of student accommodation in the UK are cluster flats, which are less expensive units with shared kitchen and lounge spaces, and the more luxurious option of studio flats, which command higher rents. Especially in the emerging university towns, cluster accommodation is booming. However, in established university cities, like Newcastle, Liverpool and Leeds, where there are a number of institutions and many students, there is a demand for more luxurious studio apartments.
Although buying student accommodation your own children could stay in when they study sounds like a nice idea, with so many universities abroad it is tricky to plan very far in advance. Bathurst says, “With student numbers out weighing student beds 3 to 1 in the UK, my advice is to take advantage of this opportunity. Invest in a student flat in a university location that offers the best investment and yield, even if your children won’t end up studying there,” she says. “Theyield from a carefully chosen investment property will provide a monthly income in a stable currency directly into a bank account where the property is. Your child could use those funds to pay their rent at their chosen studying location.”
Bathurst highlighted a project Hurst & Wills are launching soon, situated close to Newcastle Under Lyme and Keel Universities and the nearby Stoke University. With three universities and large number of students Newcastle is ripe for top-end studio units. “There is such an undersupply of student housing in Newcastle,” says Bathurst. “The demand from those three universities is 25 000 strong, and there are currently only 500 studio apartments.”
“We are very excited about this new development,” she says. “These are luxury studio student accommodation units, available from £74 600 (approximately R1,3m). There is a 7.5% NET yield guaranteed for 5 years and it is full managed and completely hands-off,” says Bathurst. “They are fully furnished, including a TV, and built by reputable, leading developers with 30 years of experience.”
Student accommodation is also popular elsewhere in Europe, such as Lisbon and Porto in Portugal. Bathurst says, “In Porto it’s still possible to buy plots or buildings to develop or refurbished in the centre of Porto or close to universities for affordable prices. However, we expect this window of opportunity to close soon, as real estate demands are increasing rapidly.”
Mckinsey & Company have estimated that international income of Higher Education in Portugal could reach €1.4bn by 2020. The high demand from international students wanting to study (and live) in Lisbon has led to many universities investing in new campuses and student housing complexes.
According to Bathurst, there are currently 56,000 out-of-town students living in Lisbon, 16,000 of which are international. With only eight private PBSA developments available, limited to 450 students. Porto is experiencing the same market momentum, but at a smaller scale. “The existing supply of private PBSA, which was developed and is operated by national players, is fairly recent and shows occupancy rates of around 100%,” says Bathurst. **JLL estimates a shortage of 13,000 to 18,000 beds in Lisbon, Porto and Coimbra.
“It is important to work through an independent property specialist, especially in this booming market,” says Bathurst. “Developers could mislead clients as they are under pressure to sell their own stock, while independent specialists are unbiased and work for the client.”
SOURCE: Hurst & Wills