Capital values for student properties increased on an annual basis, according to the latest Student Accommodation Index by CBRE.
In the year to September 2018, capital values for student assets rose by 6.5%, surpassing last year’s growth of 4.5% in the same period.
Gross and net rents increased on an annual basis by 3.0% and 3.4% respectively, whilst total returns at a national level rose by 12.3%.
Separating the figures by region reveals that capital values in Central London were up 12.4% in the year to September 2018, bringing total returns to 17.5% compared to 14.2% last year.
Annual total returns for regional student accommodation for 2018 reached 10.5%, with a 4.5% increase in capital values.
The regional figures were additionally divided into Super Prime, Prime, and Secondary locations, which had capital growth of 11.1%, 6.0% and -9.0% respectively, whilst net rental value growth was positive in Super Prime (3.6%) and Prime (3.9%), compared to a 1.5% decline in Secondary locations.
Capital values increased for larger student accommodations of 500+ beds by 7.2%, bringing total returns to 12.9%.
Medium-sized properties (250-500 beds) reported a 6.2% growth in capital values and a 12.2% increase in total annual returns, whilst smaller properties of fewer than 250 beds had capital growth of 5.8% and total returns of 11.6%.
Commenting on the figures, CBRE’s Head of Student Accommodation Jo Winchester said, “This first published Student Accommodation Index demonstrates the continued strong performance of the sector which has outperformed the CBRE Monthly Index over the last 8 years.
“UK Student Accommodation is now firmly established as a mainstream investment sector. Investors will find the increasingly sophisticated raft of influences on performance highlighted by this index, including location, asset scale, university rankings, applications, and distance to university very informative.”