Investors have pumped more than £1.6bn in UK student accommodation in just nine months.
According to CBRE’s Student Accommodation Index, the sector has shown total returns of 9.95% in the 12 months to September 2013, higher than IPD total returns on offices, industrial and retail property respectively over the same period.
Jo Winchester, head of student housing advisory at CBRE, said international students were underpinning growth of the sector.
She said: “International students spent over £10bn on tuition and living expenses in 2011/12. We expect the number of international students in the UK will grow by 15%–20% over the next five years, as the demand for English-taught degrees continues to lure students from across the globe.
“The result of this popularity is reliably high occupancy rates in student residences and stable income streams, making the sector an attractive prospect for small and large investors alike.”
Government support for Higher Education in 2013 has also buoyed investors’ confidence, according to CBRE, with measures to reform visa processes, the statement of no intention to cap numbers of international students and the relaxation of penalties for universities who over-recruit students.
Total UK education exports in 2011 were worth £17.5bn, making education the UK’s fifth largest services export sector, ahead of insurance and computer services.
The findings come after a number of high-profile deals in the student sector in 2013, following the collapse of the Opal Group of companies and the sale of its assets.
US multi-family and student housing operator Greystar recently purchased a portfolio previously operated by Opal worth £310m.
Property Week revealed in October that Australian student housing operator Campus Living is under offer on an portfolio of 4,539 beds previously run by Opal.
2013 has also seen the launch of the first dedicated student housing REIT, GCP Student Living Plc, on the London Stock Exchange, offering smaller investors a new route into the sector.