Research into the student housing market suggests the regions will become increasingly attractive to investors in the coming year, according to GVA.
High land and development costs in the capital and improving occupier demand outside London is drawing investors to the regions.
Furthermore, there are concerns in the market around the sustainability of rental growth in London, which GVA predicts will increase next year. Yields for rooms in university halls and London direct let schemes have remained stable over past two years, whereas direct lets in the regions have seen yields harden by 25 to 35 percentage points in 2013 to 6.75%.
Direct lets are becoming more popular as investors risk not achieving full occupancy in exchange for the possibility of higher returns. According to GVA’s research there has been £112 m of direct let deals in the regions this year.
Overall there has been more than £1.3bn worth of deals carried out in 2014. Of that figure £820m was portfolio sales, which is 57% of the market.
