UK University Cities: A Lucrative Market for Overseas Property Investors

The UK’s reputation as a global education hub continues to attract students from around the world, creating a robust demand for rental properties in key university cities. For overseas investors, this presents a unique opportunity to tap into a resilient market with strong potential for high rental yields and capital appreciation. This article will explore some of the most lucrative UK university cities for property investment, emphasising the strong student rental demand in these locations.

UK Rental Prices See Moderate Growth

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  • Strong and Growing Student Population: The UK boasts a thriving higher education sector with approximately 2.9 million students, with a 4.3% Compound Annual Growth Rate (CAGR) since 2017-18 (PwC). This large student population ensures a consistent demand for rental accommodation.
  • International Student Influx: The UK is the second most attractive country for international students. In 2021-22, there were 679,000 international students enrolled, surpassing the government’s 2030 target. This influx drives demand for quality housing, particularly in popular university cities.
  • Resilient Market: The demand for student accommodation is largely unaffected by economic downturns, making it a stable investment option. Regardless of economic conditions, students will always need housing.
  • Higher Rental Yields: Student properties often yield higher returns compared to traditional residential properties, with purpose-built student accommodation (PBSA) delivering net yields ranging from 4.5% to 6.5% (Savills).
  • Long-Term Investment: The consistent demand and the long-term nature of university education make these investments particularly attractive for those seeking stable, long-term returns.

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Key UK University Cities for Property Investment

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Several cities in the UK stand out for their strong student populations and high rental demand. These include:

  • London: As the UK’s capital, London remains a popular choice among international students and investors. In 2021-22, 18% of all UK students studied in London. London is consistently ranked as the best city globally for students, driving high demand for educational offerings.
    • High Demand: London’s diverse range of universities and institutions attracts both domestic and international students, leading to sky-high rental demand.
    • Diverse Investment Opportunities: From high-end areas like Kensington and Chelsea to emerging areas like Brixton and Stratford, London offers a wide variety of investment options.
    • Satellite campuses: Many non-London and international education providers have established satellite campuses in London to capitalize on the high number of students.

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  • Manchester: This is one of the UK’s fastest-growing cities, with a large student population and a thriving tech and media sector.
    • Strong Student Presence: Home to five universities, including the Russell Group’s University of Manchester, the city has a 52% graduate retention rate.
    • Affordable Property Prices: Compared to London, property prices in Manchester are more affordable, making it an attractive option for overseas investors.
    • High Growth: House prices in Manchester have risen more than any other area in the UK over the past decade. The city boasts average rental yields of over 6% and has a forecast of 20% capital growth over the next five years.

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  • Birmingham: As the UK’s second-largest city, Birmingham offers significant property investment opportunities, drawing increasing interest from overseas investors.
    • Established Economy: Birmingham’s thriving economy and regeneration projects are attracting more investors.
    • Large Student Population: With five universities, including the University of Birmingham, this city has a 41% graduate retention rate, ensuring high rental demand.
    • High Rental Yields: Birmingham offers average rental yields of over 6%, with a projected 20% capital growth over the next five years.

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  • Sheffield: This city is home to 67,000 students across two universities, including a Russell Group institution.
    • Lower Capital Entry Point: Property prices in Sheffield are lower compared to other cities, offering a lower barrier to entry for investors.
    • Strong Growth Forecast: Sheffield has a 42% graduate retention rate and a projected 20% capital growth over the next five years, with average rental yields of 7.2%.

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  • Liverpool: Liverpool has low property prices and a large student population, offering good opportunities for investors looking to maximise their return.

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  • Newcastle: The city’s affordable housing and large student population have fuelled property investment, with a focus on HMOs (houses of multiple occupancy) and student accommodation.

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Student Accommodation: A Lucrative Investment

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  • Purpose-Built Student Accommodation (PBSA): This sector has matured significantly, attracting institutional investors due to its stable returns and resilience. PBSA achieved an average occupancy rate of 92% in the 2021-22 academic year, showing its reliability.
  • Residential Properties: In addition to PBSA, two-bedroom residential properties are also popular as they appeal to a wide range of tenants including couples, friends sharing, and single occupants. These properties are popular with students looking to live with friends as well.
  • Furnished Properties: Students expect a fully furnished property, creating more work for landlords in upkeep and maintenance. However, these properties are easy to furnish with affordable options from places like IKEA.
  • Guarantors: Many students come with guarantors (usually their parents), reducing the risk of missed rent payments.
  • Long Tenancy Periods: Students typically rent for 12-month periods, offering a steady rental yield.

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Maximising Your Investment

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  • Property Management: Consider using a property management company like Value Invest to handle day-to-day responsibilities such as sourcing tenants and dealing with contractors.
  • Guaranteed Rent: Some property management companies offer guaranteed rent for a set period, protecting your income even if your property is vacant.

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Value Invest: Connecting You with the Right Properties

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At Value Invest, we understand the nuances of the UK property market and can help overseas investors capitalise on the lucrative opportunities in key university cities. We have a deep understanding of student rental demand and can guide you to the best investments based on your individual needs and investment goals. Our expertise allows us to:

  • Provide Expert Advice: We can provide expert advice on which locations to invest in, depending on your investment goals, and access the best deals.
  • Offer Tailored Solutions: We tailor our investment strategies to meet the specific needs of each of our clients.
  • Connect You with the Right Properties: We source and deliver exceptional buy-to-let property investment opportunities through trusted property partners such as Berkeley Group, at no extra cost to our global client base.
  • Provide End-to-End Support: From sourcing properties to providing ongoing property management, we assist you through the entire process.

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By partnering with Value Invest, you can confidently navigate the UK property market, leverage the high student rental demand, and secure long-term, high-yield investments.

Value Invest partners with various UK developers and property management companies such as Berkeley Group, a reputable UK property developer focused on delivering a wide range of properties across the UK – from luxury flats to family homes – catering to both domestic and international investors. They provide a streamlined property purchase and ownership experience, including assistance with overseas mortgages. One of their recent developments is The Exchange, located in Watford, which has a few remaining luxury flats that you can still claim.

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Ready to Enjoy The Potential of the UK Property Market?

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Investing in the UK property market requires thorough research to make sure you’re investing in the right areas, trust in the developers, and patience until completion. With the help of our expert team in Value Invest, we can guide your way to wealth accumulation.

Make sure to tune in to our monthly UK Property Market webinar to learn about the latest trends in the market and its performance.

Value invest identifies exceptional properties, pools together the resources of individual investors and purchases properties at a discounted prices:

  • Investors enjoy Value Invest’s deep understanding of the UK real estate market in hand picking select properties in specific locations along the fast growing London commuter belt regions.
  • Purchasing with the Value Invest model enables significant savings by buying in bulk and reducing the purchase price per SqM.
  • Choice of both off-plan properties at steep discount or fully complete tenanted properties with good downside protection against risks
  • Minimum of ⁠50% financing is made available to international investors.
  • Following acquisition, the property is managed entirely by the Value Invest team, including all aspects concerning the investment such as: Rentals, maintenance, renovations and future re-sale.
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