Students – or their parents – hoping to beat the cost of accommodation at university can make returns of 9% a year but only in select spots, according to a report.
Just nine university locations make the ‘top grade’ for investors, including prestigious Oxford and Cambridge, said estate agency Savills.
The spots were picked based on a combination of factors, including demand, university academic rank and the supply of purpose built accommodation.
“Over and above demand as defined by student numbers, university rankings are normally the first reference point for prospective students and a good indicator of investment risk,” said Marcus Roberts, Savills head of student investment.
Student property has been a stable investment during the downturn and – despite increased tuition fees – Savills predicts future returns will remain buoyant.
In part, this is thanks to increased demand from international students. Figures released by UCAS show a 9.9% increase in number of students applying to UK universities from China and a 19.3% on those from India.
Savills forecasts total returns of 9.3% during the 2013-14 year, made up of static net yields at 6.3% and rental growth of 3% due to improving demand and restricted supply coming through.
“We are confident that student housing will continue to prove a counter-cyclical investment, but the market is not without its risks,” added Roberts. “Investors should consider investments on an institution by institution basis, remaining mindful of the city supply where there are multiple universities.”
Find out what you can get for your money and closer look at the yields of each location in the gallery below.