A new report by Savills has revealed that the student accommodation sector continues to be a stable market for potential investors.
Even though there has been a recent rise in tuition fees and tougher visa controls are decreasing the number of international students, growth is still estimated by Savills.
The Savills Student City Monitor estimates that total returns will stand at 9.3 per cent for the 2013/14 academic year, with net initial yields of 6.3 per cent. Furthermore, rental values are set to grow by three per cent as demand exceeds supply in major cities.
This good news follows weak rents recorded in the 2012/13 year, while applications also fell by a mammoth 6.7 per cent within the same time period. Industry analysts have suggested that the rise of tuition fees have been behind these figures. For now, numbers seem to be up by 2.7 per cent for the 2013/14 year.
Marcus Roberts, Savills head of student investment, said: "We are confident that student housing will continue to prove a counter-cyclical investment, but the market is not without its risks. Some cities will have reached maturation relative to student numbers, while some universities will be more susceptible mid-term to fee increases. Over and above demand as defined by student numbers, university rankings are normally the first reference point for prospective students and a good indicator of investment risk."
The Monitor, which ranks universities from 'First' to 'Pass', only saw nine cities make the top grade. This means that the cities have strong international demand, affordable housing and strong academic achievement. The top nine in the report were Bath, Bristol, Brighton, Cambridge, Cardiff, Edinburgh, London, Oxford and St Andrews.