Will Brexit Have A Negative Impact On The Student Property Market?
Investments in purpose-built student accommodation (PBSA) have soared over the last few years and continue to rise. The demand for high-end luxury student accommodation from the UK’s ever-increasing student population shows no signs of slowing down.
Since Britain voted to enact Article 50 and begin the process of leaving the European Union in the June 2016 referendum, some quarters have predicted various crashes, slumps, and crises across Britain’s industries. Polls taken before and after the referendum found that almost nobody felt that Britain would benefit in any way from leaving the European Union.
Despite the warnings and portents of doom, a combination of factors indicates that the UK’s PBSA market is almost Brexit-proof. That may well be asking for trouble and tempting fate, but even in the face of a slumping housing market, particularly in London, and an agitated Pound that is struggling in valuation against other currencies, the student property market looks set to weather any incoming Brexit-based storm. In short, Brexit has had almost no negative impact on the market, instead of seeing a wealth of investment and interest; a good deal of it from overseas.
Money from Singapore poured into the student property market in the latter half of 2016. Trade from the Far East nation leapt from £1.9bn in the first half of the year to £2.1bn. It keeps with the trend of Far East investors seeing PBSAs as an asset class with unbeatable value and high returns. Brexit has done little to dampen the market. Quite the opposite.
The year of the Brexit referendum saw the overall investment volume in student property rise to £4.5bn, an increase of 23% on the year before. The following year saw an even more significant rise still, with investment in student properties and developments in the UK hitting £5.6bn.
A lot of the drive for student property investment has come from overseas. In the year of Brexit, overseas investors almost doubled their market share in UK student property from 35% to 64%.
Student property is a worthwhile investment with major long-term potential, even in the face of such unprecedented political uncertainty. The referendum vote did nothing to quell rising student numbers or applications. In 2016 applications from UK and EU students to the UK, universities rose by 7.5%.
In the wake of the referendum the government confirmed that students coming to the UK from any country in the European Union would be eligible for student loans, nor would any funding be withdrawn. With some clarity afforded by the government on this issue, it means student numbers and applications for places can continue their steady rise.
With more and more students taking their place in universities across the country, the demand for accommodation far and away exceeds supply. Properties in student property growth hotspots like Liverpool such as the ones sold by leading buy to let property investment company RW Invest are selling from the moment they are made available. There are similar stories across the rest of the country.
With rents in the student property market has risen by an average of 2.7% since the referendum result and student numbers rising constantly and exponentially, it’s plain to see that Brexit has had a negative impact on the student property market.
Indeed, things can only get better than they already are. With the Chinese government has relaxed its once strict rules regarding its citizens’ overseas investment, you can expect new, unleashed an even more Far Eastern money making its way in the UK’s already booming student property market. While Brexit is still causing tears and tantrums for many, there is no better time to make such a sound and secure investment.
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