A Guide to Investing in Student Property in London
Investment opportunities abound in the 21st century, and the list of options that investors have available to them seems to grow by the day. Investing in student property is nothing new, but it’s attractiveness is increasing.
This is thanks largely to its stability in what many consider an uncertain world. Stock market volatility, shrinking interest rates and lack of confidence in the banking sector have all led to investors looking to put their money elsewhere, especially the defensive part of their overall portfolios.
While there are dozens of cities in the UK that are worthy of your attention if you are looking to invest in student property, London stands out for obvious reasons. As England’s capital, London is a global hub and its reputation across the world as a city of culture, business, entertainment, and education is second to none.
These factors, amongst others, make studying in London the number one choice for many students, both domestic and international. But does this popularity make investing in the capital a good idea? Our guide to investing in student property in London aims to find out.
An overview of the capital
Despite being situated on a relatively small island in the global scheme of things, London is a big city with lots of character and a whole lot going for it. Around 2,000 years of history awaits visitors and the list of things to see and do here are too plentiful to mention. There are not many cities around the world that can boast four World Heritage Sites, and they form merely the tip of London’s cultural iceberg.
London is, however, far more than just a tourist attraction. It’s an ideas factory, too. The English capital is home to one of the world’s largest financial districts; is a leading light in the world of fashion, art, literature and music; it’s at the forefront of the new media revolution, and is pushing the boundaries of modern architecture whilst maintaining a more traditional feel in many of its boroughs.
Overall, London is the place to be right now, and students from around the world are queuing up to be part of its hustle and bustle.
London is responsible for around a fifth of the UK’s GDP, and the money comes in from many directions. As we have already touched upon, London is home to one of the most prominent financial districts in the world. The City of London is synonymous with business and finance, and Canary Wharf is now another established force in this sector, too.
The tech industry is also flourishing here, with areas such as Old Street (commonly referred to as Silicon Roundabout) leading the way. The American business magazine, Forbes, rated London as the most influential city in the world back in 2014 and the amount of companies willing to call London home continues to grow, despite it having the most expensive office market in the world.
Tourism is another major player in London’s economy. It’s the most visited city in the world – attractions here had 65 million visits in 2015 alone – and the tourist industry accounts for well over 350,000 full-time jobs in the capital. Over half of all visitors to the United Kingdom spend time in London, and the travel website TripAdvisor named the city as its number one destination in 2016.
Regeneration and investment
London is a fluid city, constantly changing and evolving to meet the needs of the people who inhabit it. The most recent major change to the capital’s landscape was the investment made for the 2012 Olympic Games in Stratford, East London.
What was once wasteland, this part of town now has a thriving community built around improved infrastructure and facilities. The tech industry is taking hold here as it spreads further afield from its traditional London base, Old Street. Startups are especially prevalent, thanks largely to the cheaper office space that can be found here.
As for the near future, Crossrail – recently named the Elizabeth Line – looks set to connect east to west in a manner that has been lacking in what is already an extremely well connected city. Property along the new line has already seen dramatic increases, with an average rise of 52 per cent since construction began back in 2009.
Another important development in the pipeline is the transformation of the Greenwich Peninsula just across the River Thames from Stratford. Known as the capital’s single largest regeneration project, this site is being turned into a whole new neighbourhood rather than adding a few homes to an already existing one.
An incredible 15,500 new homes will be built here along with high quality landscaping and improved facilities. The one concern for the new site is the transport links that it currently has available to it. The Jubilee Line will service its link to central London, but with such a vast amount of new property, more needs to be done.
Transport and location
London is undoubtedly one of the world’s most well positioned cities when it comes to international travel. Despite calls for more runways and airport improvements, London still remains the world’s top airline hub with an astonishing 275 people either arriving or departing each minute, 24 hours per day, 7 days per week, 365 days per year. Plus, there’s the Eurostar, which connects London to the rest of Europe via a high-speed rail service.
Domestically, London has a fantastic infrastructure in place that moves people around the capital brilliantly, although many fear that it is quickly reaching capacity (ask anyone who has travelled on London Underground in rush hour). The Tube (London Underground’s nickname), DLR (Docklands Light Railway) and dozens of overhead rail lines make up the rail network that keeps London moving and the aforementioned Elizabeth Line will join the rest when it opens in 2018.
The capital also has an extensive bus service, one of the world’s largest, that runs 24 hours a day and consists of around 8,500 vehicles. There are over 700 bus routes in London, servicing 19,500 bus stops. The traditional London bus, with its distinctive red livery, is an icon throughout the world.
Other forms of London transport include: black taxis, Boris Bikes (alternative moniker for the capital’s cycle hire scheme named after London’s previous mayor, Boris Johnson), private hire vehicles, trams, boats and even cable cars.
As one would expect, London’s road system is busy. Many Londoners choose public transport over cars, as the congestion in the capital is high, especially at peak times. Even on the outskirts of town the traffic often crawls along, with the average speed on the M25 ring road at rush hour being a mere 10.6 mph. The capital has a congestion charge in place where motorists are charged £10 per day to drive within the charging area that spans much of the capital’s heartland.
However, despite the traffic, there’s no denying that the convenient location on the world map that London enjoys makes it the perfect place to set up a business, a home, or come to study.
Why invest in London?
As we have already outlined above, London is one of the world’s leading cities and is widely regarded as much as a brand as it is a city. Double-digit growth in the capital is not unusual as the demand for housing remains extremely high. This is a trend that looks set to continue for the foreseeable future as the amount of property being built falls woefully short of what is needed.
Foreign investment is strong in London, with money coming in from Asian investors and North American funds. While some of this money will be purely for investments, many of the world’s leading figures in the worlds of business, finance, art, media and entertainment have second homes here, such is the draw that the capital has.
Liquidity is also attractive to investors as the London property market seemingly has its own microclimate within which it operates. Regardless of what is happening elsewhere and no matter how poorly surrounding markets may be performing, London property is always saleable, giving investors the perfect exit strategy should the need arise.
Although it may not be a very tangible factor, familiarity is also a key driver for London’s success. Investors like to put their money into areas they are familiar with and many consider London to be their second city, regardless of where in the world they may originate from. This could be due to the multicultural nature of the capital or even simply the fact that London is so heavily featured in art and media around the world.
With regard to student property investment specifically, London offers a unique investment opportunity for investors. The capital has one of the largest concentrations of higher education facilities anywhere in the world, and the students that choose to study in the capital come from all over the globe to be here.
This means that demand for good student accommodation is exceptionally high. Fill rates are phenomenal and while yields may be lower than elsewhere in the country, security and stability in the London property market keep it attractive – especially as a defensive asset.
Tertiary education in the capital
The opportunities for further education in London are vast, meaning that the amount of students who come to the capital each and every year are way beyond that of any other part of the United Kingdom.
A 2014 report by professional services firm, PricewaterhouseCoopers named London as the global capital of higher education, and when you examine the numbers it’s easy to see why.
In total there are 40 universities here – that’s without the foreign universities that have branches in London – making the English capital the city with the greatest concentration of top tier universities on the planet according to the QS World University Rankings for 2015/16.
Many of these seats of learning are institutions that are renowned throughout the world and have been in existence for many decades, with University College London dating back to 1826. However, as one would expect from such a large number of educational facilities, they are not all old and established. London has many modern places to study too, most notably the new international university that was formed as part of the legacy plans from the 2012 Olympic Games.
University Square Stratford (USS) is a £33 million, five-storey partnership campus from existing institutions University of London, Birkbeck and the University of East London. The major new campus is hoped to bring the people of East London much needed improved facilities for higher education, enhancing job prospects for all students who attend.
Why students choose London
We’ve already touched upon the cultural heritage, diversity, history and general greatness of the capital, but are there any other reasons why so many students – both domestic and international – choose to come to London over all of the other options available?
In 2014/15, 359,990 students called London home – 110,000 of which were from overseas – and the reasons why they came here varies as much as the cultures that they left behind. Some will flock here for the free museums, contrasting architecture and restaurants, whereas others will want to experience the hustle and bustle of a major city for the first time and take in the nightlife and social scene that London has to offer.
London really does have everything for the young and adventurous. World famous clubs, bars, pubs, restaurants, theatres…you name it, it’s here. Shopping districts abound, too. Although, student income may prohibit venturing into some of the more expensive parts of town for a little retail therapy.
Of course, there is also the extremely high standard of the universities. London is widely regarded as one of the best places in the world to study, with big names such as Goldsmiths, Brunel, King’s, London School of Economics (LSE), University of Westminster, University of London, Imperial College London, Middlesex University being just a few that are available.
One thing they don’t come here for is the weather. Above all else, the British climate is the biggest gripe that international students have when they choose London for their higher educational studies. But, hey, you can’t have everything.
Want to know more? Check out Everything You Need To Know About Student Property Investment In The UK and 10 Student Property Investment Misconceptions.
If you’re ready to start your investment journey in London, get in touch with Aspen Woolf today.