Leaving Home at Any Price Lures Investors to Student Houses – Bloomberg 09-14-12

Salient to Investors:

Students prepared to pay a premium to live with their peers in city-center locations are a bonanza for providers of student accommodation, fueling acquisitions in an industry where yields are higher than other parts of the British property market.

Philip Hillman at Jones Lang LaSalle  reports big financial institutions focusing on alternative real estate assets that are less cyclical and more defensive.

College dormitory rents are rising faster than inflation.

The proportion university applicants in the U.K. rose to one third in the 1990s from 6 percent in the 1950s. Since 2006, U.K. universities took in 100,000 more students, while the the number of overseas students has almost doubled since 1999, the second highest in the world after the U.S.

British students started paying 1,000 pounds per academic year in tuition fees in 1997, 3,000 pounds in 2006, and up to 9,000 pounds currently .

Savills estimates rental income from a typical student residence in the U.K. yielded 6.3 percent last year versus 4.3 percent for other types of homes and 5.8 percent for commercial real estate.

Jo Winchester at CBRE said there’s no shortage of investors for student housing, but too little stock to buy.

Read the full article at http://www.bloomberg.com/news/2012-09-13/leaving-home-at-any-price-lures-investors-to-u-k-student-houses.html