The benefits of investing in property in university towns

Seven reasons why investors profit near universities

Investing in property located near good education facilities is one of those golden rules successful investors adhere to. University towns have been good hunting grounds for property investors. In this article, you’ll discover why investing in university towns could produce above-average investment returns. We’ll also provide you with two ways to pinpoint the best places to invest in property UK and take advantage of how a growing student population impacts house prices.

Seven advantages of investing near a university

Investing in property near a university campus could be a profitable decision. When examining house price growth and local rents, properties near universities have become the jewel in many portfolios. It is because they benefit from several positives. These include:

1.      A large population that keeps rental demand high

You might be concerned about steady rental demand; most buy-to-let investors are. An extended void period can ruin rental profitability. Large universities have a constant and consistent new intake of students. It inflates the local population and means the local property is at a premium. And if you rent to students, when one leaves you’ll probably have a queue of prospective new tenants by lunchtime.

2.      Property values can increase faster than national averages

Although this isn’t always the case, the best universities tend to enhance local property values. Why is this? As universities become more respected, they encourage inward business investment and start-ups. It is no coincidence that the greatest proportion of graduate-level professionals work in university towns. They tend to stick around once they have finished their degrees. It helps the town’s continued growth and increasing affluence. It’s a self-perpetuating positive local economic cycle.

3.      Rental prices tend to grow

As the university thrives, so too does rental demand. This demand translates into stable and rising rental prices. Should you worry about demand collapsing? Only if you are concerned that the university is about to close its lecture halls. It is one reason why buy-to-let property near the best universities provides some of the best cash flow positive opportunities in the country.

4.      Students encourage more local amenities

Younger populations are high energy. They enjoy a vibrant night time economy. They use gyms, seek entertainment, and eat out a lot. You’ll find that some of a town’s most sought-after rest, relaxation and recreation amenities are located near universities. Large restaurant chains, pubs and bistros love to set up near a campus. It makes an area more attractive to other types of residents, too.

5.      Renting to students is not the risk that many believe

If you invest in property near a campus with the intention of letting to students, you may be in for a pleasant surprise: your rental payments are virtually guaranteed. Most investors who have never let to students are under the misconception that rental payments are always late and often missed completely. In fact, the opposite is true. Many students’ rents are paid by parents. Student rents are probably among the most consistently paid in the UK.

6.      Students are not the only tenants

Where there is a university, you are likely to find a large professional workforce. There may be a university hospital, technology business parks, professional services, and, of course, university professors, admin and support staff. It is in addition to people who work in local factories, offices, retail and leisure. Investing in property near a university does not mean limiting your target tenant search to the student population.

7.      Growing student numbers and a limited supply

The student population in the UK is growing. More than 500,000 new students enter higher education every year. Universities gave up trying to keep up with demand for residential dormitory places a long time ago. Investors near universities are benefiting from some great opportunities in student pods and shared apartments. But even purpose-built student developments are too scarce to cater completely for the rapidly increasing demand in the most popular university towns. And when and where demand outpaces supply, property values and rental prices move in one direction.

Two insights to uncovering the best university towns for investment

There are two great ways to identify the best university towns for investing in property. The first is to consider the Russell Group universities. These are the red brick universities of the UK. Across the country, these universities support around 300,000 jobs. They have a total economic output of more than £32 billion annually.

In student numbers, they have more than 400,000 undergraduates and almost 200,000 postgraduates studying in them. They attract students from around the world and work with multinational companies.

Universities in this group include:

  • University of Birmingham
  • University of Leeds
  • University of Liverpool
  • University of Manchester
  • University of Sheffield

Of course, you’ll also find Cambridge and Oxford among this elite.

The second strategy is to consider the proportion of foreign and especially non-EU students attending each university. These universities have a good global standing, and that increases foreign investment in the wider community.

These metrics and investment factors are the types of data our unique Hotspots Algorithm interrogates. It examines 108 data points across 324 UK areas. To find out more, and discuss property investment opportunities in the best university towns for investment potential, contact one of the Gladfish team today on +44 (0)207 923 6100. Discover why the university has propelled hundreds of property portfolios to a stellar performance.

Live with passion,

Brett Alegre-Wood

About the Author

Brett has over 20 years experience in all facets of property, he owns various companies centred around property and is the driving force behind the education and training at Gladfish. His companies have sold over £850 million in UK and London property and he manages over 1200 properties through his estate agency chain. Today he shares his time between UK, Australia and Singapore. He is married to Arlene and together they have 4 kids.

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