With mainstream residential and commercial property under significant pressure, the student accommodation sector offers investors and developers in Birmingham an attractive alternative opportunity, according to Knight Frank's Bricks and Mortarboard Student Accommodation Review 2008.
With a total of four universities, all based in close proximity to each other, Birmingham boasts the greatest number of students in the UK outside London and Manchester, with around 75,000 students in 2007.
Thanks to the large influx of new students fighting every year for the small percentage of ‘on-campus’ accommodation, Birmingham is well placed to see increasing demand for quality student accommodation.
Ranked as number ten in a list of 24 UK student accommodation investment hotspots, the city provides an attractive market opportunity for developers and investors alike.
Tim Goddard, head of student property at Knight Frank, said: “The student accommodation market is still embryonic and whilst there has been substantial growth in development volumes, the number of active participants in the market is still limited.
“Private operated halls have seen the greatest growth in the market share, with market leader Unite rapidly developing in Eastside at Curzon Gate and other private operators such as Opal having established a presence in the city.
“Birmingham offers a strong opportunity for potential investors as it is predominately driven by the fact that there are relatively few institutional and private hall bed spaces in relation to the full time student population and an increasing number of international students.”
Student accommodation has performed strongly over recent years with total annualised returns of 10.2 per cent over five years and 12.2 per cent over three years, a stronger performance than the retail, industrial and residential property sectors.
Knight Frank predicts that over the next three years, a similar out performance of this sector will be seen.