Investing in London's emerging student districts

Now here's a good idea. Buy a student flat for your offspring, reclaim your sanity at home and own an investment
*The number of students in London, currently about 400,000, is rising despite high tuition fees

* The student housing sector has ballooned from a fringe investment 10 years ago to a global market worth £200  billion today

* Student hotspots, include Southwark, Vauxhall, Camden and Islington

Flats at Distillery Tower
From £300,000: for one-bedroom flats with great views at Galliard's View sold house prices in Vauxhall
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Property values in Vauxhall

More than 13,000 new-build student homes will be delivered by 2015, with 35 per cent of these being in the boroughs of Camden and Islington, according to property consultant CBRE. Lambeth borough has a relatively low number of purpose-built student blocks, while City of London has the least.

“Suitable locations close to campus facilities and transport links will become more important than ever as competition increases over the next few years,” said CBRE’s Joanne Winchester, a view borne out by surveys showing living close to their college is students’ number one priority.

Flats at Greendale, Camberwell
Two-bedroom flat at 67 Greendale, Camberwell
Clearly, it makes sense for parents and investors to cherry-pick locations and to consider buying a property that has wider rental appeal — a City-fringe flat, for example, that young career professionals would find attractive.

Another strategy is to focus on universities with a rising student roll. A good place to start is the Russell Group of 20 leading UK universities. Colleges that prove successful in recruiting overseas students — who account for 31 one per cent of the total in London — will be in the top investment locations as they continue to boost their global standing.

80,000 Students will be looking for a place to rent


Even with the growth in purpose-built blocks, at least 80,000 students in the capital are expected to rent privately.

“We’ve been inundated with high-net worth student enquiries from those wanting to get settled prior to the next academic year,” said Lucy Morton of letting agent WA Ellis. “They are coming from all around the world and their tenancies are generally guaranteed and paid for by their parents, who are paying up to £1,000 a week.”

The proportion of Chinese students seeking accommodation has doubled from 20 per cent to 40 per cent, according to Knight Frank. The majority of these will pay between £350 and £750 a week. They like Belgravia and Chelsea because they are close to the Imperial campus. Covent Garden and Bloomsbury are also popular because of their proximity to LSE, King’s and UCL. Often, international students are drawn to new and secure developments, which is what they are used to at home, and in general they are good tenants.

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Flats at Trafalgar Place
Flats at Trafalgar Place in Elephant & Castle, a zone 1 location
London and South East parents buying for student offspring typically want to pay between £250,000 and £300,000. “They are not postcode snobs — for them it’s about getting a smart home at a good price within 30 minutes’ travelling time of the college,” said David Galman of developer Galliard, which has schemes in cheaper inner-city areas such as Deptford and Docklands.

At the firm’s Judd Street development in Bloomsbury, more than half of the 104 apartments were bought by parents for student children.

Elephant & Castle is another student hotspot, being a cheaper Zone 1 location close to the central London action. Several big developments are under way or in the pipeline and capital growth prospects are good. Trafalgar Place is the first new private development on the demolished Heygate council estate at the heart of the £1.5 billion zone. It has 235 homes priced from £310,000. Visit trafalgarplace.co.uk for details.

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Students themselves contribute £2.5 billion a year to the London economy, with rents accounting for 47 per cent of weekly outgoings, according to Santander bank.

Not Uxbridge, Oxbridge


Arguably, London remains the most profitable place to invest. But university cities such as Oxford and Cambridge, with their elite colleges and captive community of students and academics, are also contenders.

Homes at Abode, Cambridge
From £320,000: new homes at Abode, Cambridge are ideally located for the expanding Biomedical campus
On average, student rents in Cambridge (£108.20 a week) and Bristol (£103) are pricier than in London (£93), according to a study of Russell Group Universities by nationwide estate agency chain Haart.

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Property values in Cambridge

For the last two years, Cambridge has topped the league table of the world’s best universities. With a growing population, boosted by 45-minute train links to the capital, Cambridge’s success has put pressure on its housing market, leading to high prices. After London, it is one of the few places in the UK where values have risen since the low point of 2008.

Homes are sprouting up on former green belt land to the south of the city, next to the expanding Cambridge Biomedical Campus, which already employs 8,000 professionals. These include schemes called Novo and Abode by Countryside Properties. Prices from £320,000.

The University of Cambridge itself has been granted planning consent for a £1 billion development in the north-west of the city. This will be another important commercial hub, with 1,500 private homes, 1,500 homes for key university staff, 2,000 student accommodation units plus more than one million square feet of space for research companies and institutions, all integrated with an ecology park.

Parents can invest directly in purpose-built student accommodation built by private developers. At Coda Studios, a scheme of 82 units in Sheffield, prices start at £44,000. Visit knightknox.com. Another city-centre scheme, in Nottingham, is a redevelopment of the former Nottingham Building Society head office. It offers en suite rooms and studios priced from £42,668, with a two-year rental guarantee of 9.25 per cent. Visit rocinvest.co.uk/kp-house.

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