Times have changed from the days when students lived like something out of The Young Ones. What's more, since the cap on overseas student numbers has been removed, demand for modern, purpose-built accommodation has risen sharply. It's no surprise then that investment in the UK's student housing market has risen from under £500m in 2010 to £3.8bn in the first half of 2015. And it's expected to top £5.7bn by the end of this year.
- Strong demand for student accommodation
- Shares trade below net asset value
- Attractive dividend yield
- Negligible net debt
- Expanding supply could depress rental growth
- Risk of cap on student numbers
New ventures have emerged to meet this demand. Real estate investment trust (Reit) Empiric Student Property (ESP) was floated on the London Stock Exchange in June 2014 and has now raised £312m which it is investing in students' accommodation. At the start of the 2015-16 academic year, its portfolio comprised 4,820 beds in 51 buildings in 25 cities. Of these, 36 are fully operational and 15 are forward funded or in development. This puts Empiric in a strong position to meet its target of a portfolio of 10,000 beds within five years.