Arnolds Keys senior partner Guy Gowing explores the return on investment for student accommodation in Norwich.
When investors are planning where to put their cash, the traditional, mainstream property investment categories receive most of the focus, including retail, industrial/warehousing, offices and residential buy-to-let.
But a diverse portfolio will increasingly embrace alternative types of property – and in Norwich that often includes student accommodation.
This market has snowballed in recent years, as our further and higher education institutions have grown both in terms of reputation and student numbers.
The University of East Anglia how has more than 19,000 students enrolled (an increase of 5,000 over a decade), Norwich University of the Arts has just under 3,000, and City College more than 10,000. That means that upwards of 30,000 students from these three institutions alone are all seeking somewhere to live, ideally close to their places of study.
This explosion in student numbers has seen a plethora of large-scale speculative accommodation developments, including Pablo Fanque House in All Saints Green, Crown Place on Surrey Street, Benedict’s Gate, and most recently St Crispin’s House on Duke Street (not originally designed exclusively for student accommodation, but occupied by 170 students this year, as a result of structural problems at the Ziggurats and other accommodation at UEA).
Despite this increase in supply, there is still a healthy demand for student living spaces, as well as opportunities for investors to get involved in this market.
For example, Arnolds Keys has just sold two bespoke developments, built around 20 years ago, one offering 11 five-bedroom houses close to the UEA, and the second offering eight five-bedroom houses on Dereham Road. The two properties together sold for around £5.5 million, demonstrating that a decent return is achievable.
Commentators have suggested the student market is becoming saturated, but with buoyant demand from young professionals and families for rental properties in the city which might in previous times have been let to students, the traditional supply routes for student lets are much diminished.
As long as the mismatch between supply and demand in the residential lettings market continues, the need for bespoke student accommodation will remain. Every year a new cohort of potential tenants arrives, more or less guaranteeing a constant demand for accommodation.
Choosing the right property and ensuring it is professionally managed is crucial – and, as ever, seeking expert advice is essential.
For more information, visit arnoldskeys.com
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