As investment generally could be thought of as an art not a science, it’s difficult to answer that question to everyone’s taste. A good, solid investment to one, is a dull under-performer to another.
However, looking at investors who are broadly interested in Purpose-Built Student Housing, we can draw several conclusions and use those to provide parameters of what a “good investment” could mean, and answer the tricky question that prompted this discussion piece.
To help explain what a “Good Investment” may mean in the context of this article, we will employ the “Which means that” expression – that is a personal favourite of ours as it clarifies just why a stated benefit really is an advantage. We believe in clarity and clear messaging.
Six enduring benefits of PBSH that can make for a good investment:
ONE – PBSH appeals due to its unique characteristics of seemingly-perpetual undersupply, students in most cities are still clamouring for rooms that are in chronically short supply – which means that well-located properties are usually blessed by high occupation rates, a good indicator of stable income.
TWO – Global student numbers are growing and mobility is rising – which means that more students globally will need modern, convenient and safe housing, another good indicator of potentially high occupation rates.
THREE – Higher Education is not reliant upon economic cycles and the figures show that, globally, applications to universities rise in fair economic conditions or foul – which means that investors are less likely to see the volatility they have come to expect from the “feast or famine” other assets provide.
FOUR – Leasing agreements between Universities and Housing Operators can provide fixed and certain rent payments, often for years to come – which means that, again investors can benefit from forecastable and stable income.
FIVE – The “ripple effect” being witnessed across Europe and other regions is opening-up new countries and regions to student housing investment – which means that new investors have more opportunities every day, for high yielding projects where tried-and-tested business models can be employed that have equal credibility to those used within the more mature markets.
SIX – Possible cross-over into similar demographic groups such as young professionals and essential workers, provides additional flexibility for operators, which means that changes of use to suit special events, seasonal or other eventualities can be easily applied and ensure income flows remain constant.
There are other considerations, some of a more social nature, that we will feature in subsequent articles but the above six points are very strong drivers that indicate the enduring qualities of student housing as a longer term and highly efficient investment.
As in all assessments of what represents a “good” or appropriate investment, all investors should consult their advisers or internal specialists.
What about specific regions? Here we take a look at the CEE region.