There is a continuing shortage of good quality student accommodation across the UK.
The fundamental and on-going supply and demand imbalance continues to drive exceptional rental growth with rental increases outperforming every other property sector.
The student market is uniquely positioned to produce strong rental growth even in difficult economic times.
Student accommodation has emerged as a counter cyclical asset class with relatively stable and tangible demand and income projections.
The business model of strong rental growth, low voids, and high occupancy is attractive to investors.
Edinburgh typifies this supply and demand imbalance with only 1,790 corporate purpose built beds for 45,000 full time students, growing to 51,000 by 2012.
Edinburgh University alone has over 22,000 full time students and is ranked 16th in the UK and 40th in the world (Times 2012).
The summer festival letting adds a further attractive income opportunity outwith term time. Such supply / demand imbalance in Edinburgh should continue to result in significant rental growth in the student sector.
Location
There are four main universities in Edinburgh – University of Edinburgh, Heriot Watt, Napier, and Queen Margaret University.
In addition there are further education colleges in the City including Telford College, and Stevenson College.
The Scottish Agricultural College also has a campus in south Edinburgh and the Edinburgh College of Art is affiliated to Edinburgh University.
Students from all these institutions seek accommodation in the city centre, with good direct public transport links to all institutions.
The corporate market is underdeveloped with an arid development pipeline meaning that the student housing market in Edinburgh will remain a long way from saturation for the foreseeable future. This will lead to high occupancy levels, outperforming rental increases, and continued demand for well located investment product.
Competition
Unite have 832 operational beds in six well located properties; iQ have 553 beds at Fountainbridge and Grove Street; and Watkins Jones have 347 beds at Logie Green and have just commenced on site with 299 beds at Holyrood. Along with Wellgate House, these secured and operational beds represent only 4% of the total full time student population of Edinburgh.
Other student developments have been proposed and are at various stages of planning. However none have yet progressed to being on site, and none are centrally located.
