Author: Gareth Hill
Date: February 28th, 2016
Category: Student Property Investment
Student Accommodation and its Effect on the Economy
Last month we looked at some of the reasons why investing in student property offered opportunities for profitable investment in the current UK market. Record levels of investment into student accommodation and increasingly high demand for higher quality properties has seen a surge in numbers entering the student rental market, enticed by the chance of healthy returns.
As we mentioned, there are a number of reasons for this market buoyancy, not least because of factors driving up demand, such as:
- Increasing student numbers – year on year the number of school-leavers heading into Higher Education in one form or another increases
- International Students – UK Universities are actively promoting themselves to international students as a means of revenue, with increasing numbers taking the opportunity to study at established places of education
- Expectation of Higher Living Standards – with increases in fees and general access to the trappings of modern living, students and their parents are demanding accommodation of higher quality and facilities, leading to increased number of specialised student units.
So, as these factors drive a surge in investment, one of the questions that then follows is: What impact is it having on the UK economy?
Long Term Economic Gains
Investing in student accommodation is, in effect, investing in the students themselves – fuelling the demand and encouraging the increasing numbers. The general consensus of which, suggests long-term positivity for the UK economy. The rule of thumb is that, for all the expense incurred through student investment, the long-term returns the economy receives from graduates significantly supersedes this amount.
This is a claim backed up by figures from a 2013 report by the National Union of Students (NUS) which showed that the investment in students was a driving force for £80 billion of output in the UK economy – not an insignificant figure by any stretch.
Another positive side-effect related to investing in the student market, and by consequence, in students themselves, is the impact this has on job creation in the UK. From meeting the demand for new, high-spec properties – all of which then require management – to the effects of increased spending by the students while in education, is deemed to contribute to highly significant increases in the jobs market, with one report suggesting that students help support more than 800,000 jobs in the UK each year.
To put that into perspective, as the NUS report points out, in Wales students supported the creation and maintenance of 35,000 jobs – the equivalent to 10% of the population of its capital city Cardiff.
Economic Impact on the Student Towns
A vibrant, and steadily rising, student population can have a massive socio-economic impact on the towns in which the Universities reside. We would commonly attribute a burgeoning student population with a thriving cultural scene – be that from bars and music venues to the creative arts – but the impact of their presence and engagement in a town or city can be very evidently felt upon the local economy as well.
Looking at Birmingham as an example, a city very much on an upwards curve, and you’ll find a University supporting more than 11,000 jobs, generating £460,000 into the local economy each year – which represents a more than healthy 2.2% of the city’s Gross Value Added (GVA).
And, with major University towns such as Birmingham, Liverpool and Manchester continuing to invest in more and better accommodation the signs are very strong that student numbers are going to be on the rise for the foreseeable future. Which offers opportunities for investors and positive vibes for the economy.