Liverpool has been a growing city as recent modernisation projects and new developments have turned an all-ready thriving city into one that has moved into the 21st century.
As one of the most prominent cities in the UK and in a prime location in the north, it has always been on the radar of investors. As the city has grown in population and seen a lack of housing supply, it has been an investors haven, particularly in the residential sector but what about the student accommodation sector?
Is there a demand?
When it comes to top universities, Liverpool is up there as one of the best and that has increased the demand from students to study there. With this demand has come an increase in the construction of purpose-built student accommodation and that also has to compete with the traditional student accommodation.
Analysing the figures might paint a certain picture but perhaps investors should still keep an open mind when it comes to investing in student accommodation in Liverpool. As it currently stands, there are 6,000 student bed spaces being constructed and this will be added to the already increasing number of student properties in the city, and that has left investors feeling slightly hesitant about investing in this sector in the city. This is understandable, especially when reports from the likes of Savills says that the supply of property is surpassing the demand from students. Worrying it might seem, and this might leave investors thinking that the days of high yields and low competition have gone.
Around the city centre, it is clear to see that the student accommodation sector is still thriving. Large developments are punching their way into the skyline with some developments having the ability to house over 1,000 students. There are many smaller developments taking place and over the last three years alone more than 5,800 bed spaces have been created.
Investment Opportunities Remain
Liverpool is already home to Purpose Built Student Accommodation but a large portion of that comes in the form of student accommodation located in the suburbs. Many years ago, students were seeking this kind of accommodation and that saw more and more properties being turned into houses in multiple occupation (HMOs) in an attempt to soak up the demand. While students used to have a need to live in the suburbs, they have now changed and this has meant that they have a real appetite to live in the centre of the city. Here they can be close to campus as well as the lively atmosphere and wide range of bars and restaurants. As a result, many of the student accommodation properties located on the suburbs are now being altered to accommodate young professionals who are living and working in the area but require more space and peace in the suburbs. This has meant that older student properties are being taken out of the sector, potentially leaving a gap for more centrally located student accommodation to be built.
Another positive is that in recent years, the number of students has increased considerably. Between 2015 and 2016 alone, the number of students increased from 50,000 to 60,000 and that number has grown and will continue to grow. So much so that the universities in Liverpool only provide beds for around 16% of their students and so, that means that the 84% shortfall has to be made up somewhere. This is where opportunities become apparent for investors.
Investors should begin looking at the bigger picture and the way in which student numbers are going to grow. This is a figure that will not only grow as a result of domestic students but also overseas students. More and more foreign students are choosing to come to Liverpool for the high standard of education and with that comes an increase in demand for first-class accommodation. Students from Europe, China and Japan have a different set of needs when it comes to student accommodation and they are often more willing to pay higher prices for better accommodation with more features. Therefore, they often opt for student accommodation that has a lot more space and features such as security, gym’s, communal areas and luxury features that most would associate with accommodation in the residential sector. Along with this, international students require good access to transport links as well as the vast array of bars, restaurant and shops that can be found in the centre of Liverpool. So, in years gone by where they would have opted for an HMO located in the suburbs, they now have a new desire for excellent quality and a great location. This has meant that the outdated student accommodation is being cast aside.
When it comes to investing, investors need to pick their investments wisely and perhaps not focus too much on the figures. The needs of students are changing and with that should come a new approach from investors. Therefore, they should be focusing on accommodation that is within close proximity of excellent amenities, a high standard of quality and finished as well as other services that students can make use of.
Essentially, even though there are many developments springing up throughout Liverpool that are aimed solely at students, there are opportunities. Old landlords who were once the choice of students throughout the city are having to re-purpose their properties because students are no longer valuing lower priced rents. They are now looking for simple access to lectures and a short walk home after a night out and that is why the repurposing of old properties will help to readdress the increase in supply. Once the out-of-city HMOs have been removed from the sector, it will enable investors to make the most of the increase in demand once again. So, not everything is as it might seem and even if the figures are not looking favourable, things are likely to change and with that comes plenty of opportunities to invest.