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Article > Student Property: How to Invest Successfully

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The past few years have seen student property investments experience a massive rise in popularity. They have gone from a fringe asset class to a popular worldwide market with a total value measured in billions.

Growth in the student property investment market has been partly driven by increasing demand on account of rising student numbers. This has created a distinctly high-demand/low-supply situation, resulting in attractive yields and relative security. Naturally, this was a situation that quickly caught the attention of investors. It is a situation that does not look set to change in the near future, so many investors continue to see student property as a strong option. With more international students choosing to come to the UK and caps on university admissions set to be lifted, a market that is already under strain is likely to be hit by even more demand in the coming years.

There are a number of ways to add exposure to the student property market to your portfolio, and these include:

Buying Student Properties
The most direct (and obvious) way to invest in student accommodation is simply to purchase a property that can be let out to students. This is a potentially lucrative way to invest, but like all property purchases it requires quite significant outlays. It also requires plenty of care in selecting a property. Despite the relative short supply of accommodation, students are becoming more selective than their traditional reputation would suggest. Buying a shabby house on the outskirts of the university's viable commuting zone will not do. A good-quality property offering easy access to both a popular university and local amenities is a must in order to succeed. It is often best to focus on cities with more than one university, and on markets where demand is most stable and forecast to rise.

Purpose-built student accommodation can make this somewhat easier. As well as offering lower outlays, these specially designed blocks of studio flats are usually (but not always) already occupying prime spots and offer high standards of living. However, make sure to still carry out due diligence checks, and remember that there are some disadvantages. In particular, mortgages for this type of purchase are hard to come by and there is a limited resale market.

Investing Through Stocks
If you do not have the cash required to actually purchase a property, you can still add exposure to the student property market to your portfolio. This can be done through stocks and shares. One way to do this is simply to invest in companies that are partially or fully involved in student property. The largest of these is Unite Group, which specialises in student housing development.

There are also funds specialising in the student property market. While there is not a huge amount of choice, these can be a good way to access a ready-made portfolio of exposure to student property developers and firms. One of the main funds of this kind is GCP Student Living, which carries the rather apt stock market ticker DIGS.


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