The London student housing sector failed to outdo the regional market last year, according to Knight Frank’s Student Accommodation Index.
The index found average rents for student bedrooms in the regions increased by 4.1% during the year, to £136 pw for studios and £98 pw for en suite rooms.
In London, average rents fell by 3.6% to £257 pw for studios and £192 pw for en suite rooms.
KF said: “Historically, rental growth in the prime London student market has outperformed the regions, but 2010 saw this trend reverse, largely due to pressure on London’s high-end studio rents.”
However, the agent said the decline last year was on the back of substantial year-on-year growth.
KF said: “Rents will rise significantly in September 2011 driven by the expectation that there will be a record-breaking number of applications from students wanting to avoid the tuition fee rise in 2012.”
James Pullan, head of student accommodation at KF, said the sector was now recognised by investors as a “critical component” of a balanced portfolio.
KF’s index reveals the sector provided a total return of 13.53% in 2010 and an investment yield of 6.25%.
