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What if the best property investment was PBSA?


Nothing to do with anxiety disorders, PBSA – more commonly known as Purpose Built Student Accommodation  – is basically the new student halls of today. And despite Brexit and fears of other political uncertainties, global investors are continuing to invest in PBSA in the UK. Why? Mostly because it offers stable income with strong year-on-year rental growth prospects. Especially when you consider that the more mature asset categories, such as offices, commercial assets or properties no longer are. @PuiGuanM from @estatesgazette even pinpointed earlier this week that the student accommodation market is shedding its alternative class label to become [an attractive?] market on its own. Here are a few reasons that may explain why:

 

à While students tend to prolong their studies in economic downturns – they prefer to wait for the job market to improve – which helps the student housing market gets stronger.

 

à Also creating stronger demand for student housing is the international education strategy proposed by the government which aims to boost overseas student numbers by 30% to 600,000 per year by 2030.

 

à  Given that student accommodation to this date remains largely under-supplied at a national level, more projects – and opportunities to invest – will be set into motion within the next couple of years.

 

But generating the optimal level of returns is not necessary as easy as building then renting an asset. More than any other categories of consumers, students have growing expectations – and their mental health is one of them – that need constant management and could lead to significant investments. It is then no surprise to see that a whole category of them are looking to rent higher quality student accommodation. And the good thing is that studies now indicate that price may not be a determining factor with, in many cases, students being eager to pay a higher rent in exchange for better living standards. A dynamism that is worth looking into.

 

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