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Investors plough £348m into student accommodation

Tuition fee increase expected to further strengthen investors appetite.

Increasing tuition fees and a shortage of supply have seen institutional investors commit nearly £348 million to UK student accommodation since the start of the year.

New research from CB Richard Ellis found the long term guaranteed income stream offered from student residential was proving increasingly attractive to investors, with yields of between 5.25 per cent and 7 per cent on offer.

Student numbers increased by four per cent last year and the research identified a significant shortfall in dedicated accommodation.

Brighton and Hove currently has five full-time students for every bed space, Dundee has seven and Glasgow nine, according to CBRE.

Head of residential research Jennet Siebrits said:  “The majority of students are likely to react to the impending fee increases by taking out larger living loans or digging deeper into parental pockets.

“As a result, students will become more discerning and expect higher standards, more choice and a better overall university experience.

“Students will demand high quality accommodation, a good service-led approach from operators and ideally an all-inclusive rent.”

Ms Siebrits said universities’ lack of capital would see private developers relied upon to plug the gap which would see more opportunities to work with institutions.

She said existing assets would be the most attractive to investors as they provide the best security.

But she predicted that sector overall would continue to outperform most other sectors “by some margin”.

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