Student accommodation investment is an easy buy-in to the property sector

By Simon Morris On Tuesday, September 02 nd, 2014 · no Comments · In ,

Simon Morris is a London-based property expert with a speciality in commercial property. In this blogpost he looks at student accommodation provider Unite Group who are reporting this week that their accommodation portfolio is already nearly fully let, on increased rents for the next academic year.

Shares in Unite Group are set to bounce upwards in the wake of news about increased rents and an oversubscribed portfolio of property. Investors wanting to get a slice of the UK property market could be attracted by stable rental income from the student sector.

Low costs of borrowing

Unite Group are currently enjoying the best of both worlds with low borrowing rates and increasing rents. Student numbers remain resilient in the core areas and university applications are up 3.6 per cent according to UCAS.

Occupancy levels for Unite’s student accommodation in the current academic year are at a record 92 per cent. These figures are up two per cent on the comparable period last year. As well as rents rising, and the demand for accommodation being at a record, the net value of Unite’s property portfolio increased by £134 million to £816 million.

London students

Demand for student accommodation in the capital remains high and Unite Group plan to expand in this area over the next year with 1,600 beds to be added to the current portfolio over the next two years.

These added beds will mean that half of Unite’s portfolio will be based in London. Brokers in the know calculate that this alone will add 74p to the next asset value per share over the coming two years.

Property Investment

Those wanting to invest in property via the stock market are being advised that Unite Group look like a good buy. I’d always advise that you take thorough advice before investing and always make sure you do as much research as possible before committing.

The property market is all about delivering sustainability and growth over the longer term. At the moment Unite Group are benefiting from low borrowing and rising rents. The shares at the moment don’t offer much by the way of income, this may rise according to Unite Group Chief Executive, Mark Allan who expects to increase the pay-out next year (analysts forecast a 45 per cent increase).

About Simon Morris

Simon Morris is a London-based property expert with a speciality in commercial property. He acts as an advisor to UK property investment funds on how they can maximise revenue potential on their property portfolios to guarantee long-term profit.

If you’re interested in property as an investment you can download the Simon Morris ‘Guide to Property Investment Options’.

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