Student Accommodation in Europe is attracting overseas investors

For overseas investors, finding the right property which offers great returns is often hard to find. The budget of small investors often does not stretch far enough so that they can purchase non-residential commercial property.

However, overseas investors have not really explored the possibility of investing in student accommodation which comes with lower risks and higher yields.

What are the benefits?

A lot of money has been invested by foreign investors since 2012, in fact it’s around £6 billion, and so what exactly makes it such as eye-catching prospect?

The main thing to consider is the fact that international students are increasing in numbers, this means that the demand for student accommodation will grow considerably. For those looking to invest, it will mean that there is a lower risk as students will always require accommodation.

Student accommodation investment also come with higher yields with the average yield being around 4-6% each year. This figure can change depending on the location and the size of the university but the yields are certainly achievable.

The price of apartments can be relatively low with apartments in Liverpool being available for as little as £70,000 and with this comes complete management of the property as investors only invest as a way of maintaining capital. This will mean that the property is managed on a daily basis from finding tenants to dealing with repairs.

However, there are potential problems. Repurposing these buildings is often difficult because they have been built specifically for students and they are therefore located in specific areas. Investors are not able to use the apartments for their own use and tenants have to be studying at the university.

It has already been mentioned that the average yield is around 4-6%, so anything promised above this is likely to come with risks such as the location and a lack of demand. Therefore, purchasing a brand new property will mean that yields can be achieved straight away.

The countries that investors should consider are the UK, Germany and France. This is because the markets in these countries offer reliability as well as demand. For investors, choosing the right fine location means it has to have one magnet and this means a university that has a low supply of property and student accommodation.

In the UK the likes of Bristol, London and Edinburgh have a low supply and this makes them ideal locations for student accommodation. The number of students heading to the UK to study is on the rise and the same can be said for international students. Students are now searching for accommodation that is plush, comfortable and has everything that they need and this is great for investors as it gives them an insight into what they need to invest in, allowing them to ensure that they make the right investment that comes with the best yields.

Mark Burns

Mark Burns is a Director and Property Investment Consultant at Hopwood House. With over 10 years' experience in property investment, Mark has provided investors with a wide range of opportunities in exotic locations around the world.

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