The U.K. is attracting a lot of global attention at the moment and overseas investment is steadily rising across all markets. U.K. real estate has always been regarded as a secure investment type and there has been heavy spending over the last few years with buyers favouring this asset over all others.
A property type which has fared particularly well is student buy-to-let with global property consultancy Knight Frank stating that "total returns in the sector have outperformed all other traditional asset classes" in the U.K. and that this has been the case since 2011. It is predicted that this will continue well into 2014 thanks to a maturing market and increasing student demand.
This demand has been created by a number of factors; a shortage of suitable accommodation, a natural decrease of the old housing stock and the movement of students away from traditional shared houses.
Student numbers in the U.K. are also being boosted by the growing number of international students flocking to the country. Knight Frank has predicted that these numbers will rise by 4 per cent in the upcoming academic year, and the government has stated that they will continue to encourage this growth.
Within the student real estate category, purpose-built accommodation developments are thought to provide the highest returns. Purpose-built student property varies widely, from cluster rooms with shared kitchens to premium studios with private amenities and additional leisure facilities. Although more expensive to rent, these high-end developments are becoming more in-demand as students increasingly look for accommodation that will both support their studies and aid social interaction.
This creates the ideal conditions for a successful property investment which has resulted in student accommodation emerging as the U.K.'s strongest asset class. International investors have been quick to identify this trend and many are even buying student property to offset the cost of sending their children to British university.
Vita Student is a provider of private accommodation in the U.K. and its products represent the very finest student residences on the market. It offers bespoke studio apartments which have been specifically designed for students, alongside a large communal ‘hub’ which includes relaxation, study and social areas.
It currently has eight developments across the U.K. in popular university cities such as Manchester, Liverpool and Exeter. The latest development has just been launched in Sheffield which serves the needs of 63,000 students and offers investors an assured 35 per cent net return over five years and a predicted capital appreciation of 6 per cent each year.
More than 1,200 Vita Student apartments have been sold by the exclusive sales agent, Select Property, to investors eager to benefit from this flourishing sector. A significant amount of these apartments have been sold to investors from Canada who are looking for an alternative buy-to-let investment. Ayaz and Sunita Davidson from Toronto are two such buyers.
Canadian investor buys British buy-to-let
Ayaz Davidson is a 42-year old investment banker from Toronto, Canada who has been investing in property since he was 18 and a student at McGill University in Montreal. Rather than renting a room in a shared house, he decided to buy his own property and rent out the extra rooms to his friends.
“The success that I had with my first property paved the way for me to build an extensive portfolio and I now own multiple properties across the world. I do own shares as well but I have found that they don’t generate the same level of yield that property can over the long-run, through both capital appreciation and rental returns.”
Due to rising house prices in Toronto, Ayaz was on the look-out for a new property investment in December 2013 when his wife, Sunita, came across an opportunity in the U.K. while they were on vacation in London. He explains: “My wife has always wanted to invest in the U.K. as she went to university at the London School of Economics (LSE) but unfortunately we just hadn’t found the right opportunity. After doing some research Sunita found out about Vita Student and we started to look into it in more depth.
“The proposition of high-quality student accommodation, assured high yields and a relatively low entry point meant that Vita Student at Portland House in Exeter was very appealing.
“I have always invested in the very highest quality products as I believe that it pays dividends in the end. The level of specification that Vita Student offers makes sense as the products stand out from the market and it means that the accommodation will be really attractive to overseas students.”
Ayaz finalised his purchase in January 2014 and is now waiting for the development to be completed in September 2014 when he will start receiving 7 per cent rental returns annually for five years.
Visit www.selectproperty.com to find out more about Vita Student and its latest project in Sheffield from its exclusive sales partner, Select Property.
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