Educated investors on the right course
Higher education made the headlines this summer for all the right reasons. A record number of students have been accepted on courses by universities for the academic year 2013-14, following the announcement of A Level results.
And this growing demand for higher education places came just days after Business Secretary Vince Cable announced plans to increase the number of overseas students in those universities by 20 per cent over the next five years – an extra 90,000 students.
These are just two of the reasons why investing in quality student accommodation is becoming increasingly popular among investors.
And it is why Portergate Property Management is currently rolling out its boutique student living concept across the North West of England. Its business model is receiving a “terrific response” from investors.
Portergate has just opened a £7million new-build student accommodation development in Salford, has received planning permission for a £18millon project in Preston, Lancashire, and has plans for a third project near MediaCityUK at Salford Quays.
It now has more than 500 rooms open, under construction or with planning consent across the North West.
Demand for quality accommodation from UK and overseas students is already high, and the experts see it only going one way – upwards.
Earlier this year property expert Knight Frank released its forecast for the UK’s student accommodation sector. It predicted a 9.2% average blended investment return over the next 12 months.
James Pullan, head of Knight Frank Student Accommodation, reported: “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.” He added: “The market is still structurally undersupplied in all core university cities.”
Fellow property expert Savills is also forecasting growth. It reports the student housing market has “proven a resilient and stable investment” during the downturn.
Its experts also highlight the growing importance of overseas students, particularly from Asia, whose numbers have grown on average 8.5% over the last six years.
The Government also recognises this. Its plans to attract even more students is part of a new International Education Strategy, which has revealed for the first time that the UK’s education export industry is worth a staggering £17.5 billion to the economy.
As David Willetts, universities and science minister, says of the new drive: “There are few sectors of the UK economy with the capacity to grow and generate export earnings as impressive as education.
“Our universities, colleges, awarding organisations and schools are recognised globally for their excellence.
“However, there is more that we can do to take advantage of this powerful reputation, and to seize the opportunities to stay ahead in the global race.”
The prize in winning that race is huge. The global education market is estimated to be worth $4.5 trillion annually. The new international education strategy is designed to ensure British schools and universities make the most of it.
As part of the new strategy an “Education is Great” campaign will be launched to promote UK education to overseas students. Sir Eric Thomas, vice chancellor of Bristol University, has been appointed UK Education Champion to promote the UK education sector overseas. It’s all good, positive stuff from the Coalition and for our investors.
And there is no doubt that quality accommodation will play a key part in this drive to bring more students onto the UK’s campuses.
As Marcus Roberts, Savills head of student investment, puts it: “The provision of good quality, well managed accommodation is key to an institution’s ability to attract top class students.”
Porthergate’s new luxury Riverside House hotel-class luxury student residence is within walking distance of the University of Salford, which each year attracts more than 3,000 international students from over 100 nations around the globe.
Work will start soon on the company’s new Preston venture, which will be built in the university quarter of a city that welcomes more than 2,000 international students each year, representing more than 100 nationalities.
The accommodation will also include units aimed at post-graduate students from the university and for skilled apprentices starting their careers in the area’s high-value, high tech advanced manufacturing sector and its new Enterprise Zone.
Anthony Jackson, chairman of Portergate, says: “We’re building on the continuing success of Britain’s higher education sector and the growing demand today’s students – and their parents – have for purpose-built, quality accommodation. They are investing in their children’s future and so are we.”