The property advisory group revealed that £1.4bn worth of transactions were completed in Q1 2017 in the student housing market, double the £700m in Q1 2016.
JLL believes investment in student housing will rise to £3.5bn as new entrants – predominantly from Asia – join more seasoned investors.
Analysis from JLL found that across 79 university cities and towns, including London, nearly half have supply levels below 30%, highlighting strong development opportunities.
Further restrictions on change of use from homes to HMOs under Article 4 is also set to play an increasingly important role in purpose-built student accommodation providing alternative accommodation.
Some of the highlights from Q1’s transactions include the purchase of 3,067 beds at Aston Student Village for £227m by a joint venture between Unite and GIC.
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Meanwhile, JLL’s sale of Woburn Place in London on behalf of Unite Students to GCP Student Living for £135m reflected a value of £316,000 per bedroom, the highest price paid per room to date.
“Student accommodation continues to be seen as a defensive asset due to its stable income profile,” said Philip Hillman, chairman of JLL’s alternatives team.
“For the rest of the year we will see investors rationalising their existing holdings rather than undertaking substantial portfolio changes.
“There will also be a move to more conservative pricing on development and forward funding portfolios compared to operational portfolios, reflecting the additional risk.”
JLL’s research also highlighted the impact of Brexit, the rise in fees and the modest reduction in the number of 18-year-olds in the UK.
The adviser predicts that government plans to introduce fast-track degrees will also increase demand for purpose-built student accommodation as students would be unlikely to look for alternative accommodation if doing shorter degrees.