Real estate is always a good option for your portfolio. But what sort of property to invest in? Over the last ten years, there has been an increased interest in purpose-built student accommodations or PBSAs. These are pretty much what they sound like – accommodations built specifically for student populations.
“PBSAs aren’t just housing that just happen to be located near a college or university and happen to have students living there,” explains Richard Cayne of Meyer International. “These properties are more like supercharged dormitories where investors profit from the income while students get a more independent lifestyle off campus.”
Purpose Built Student Accommodation, more than just dormitories
Purpose built student accommodation sounds complicated, but it’s actually not. In many ways, it is a unique real estate opportunity. In university or college towns, there can be a high demand for off-campus housing. Especially if the institution does not have enough housing supply. Because school terms are usually fixed, there’s not the same fluctuations as with residential or commercial projects. Maintenance can also be less arduous than with other types of housing projects. And, to encourage enrolment and student populations, some governments offer special incentives for PBSA project developments.
For students, PBSAs offer an alternative to living on campus. There may a lack in quality or availability offered by the institution, or the students prefer more updated facilities or more convenient access to town or city itself. PBSAs can often offer amenities such as kitchenettes or onsite gyms. And depending on the location, the lease terms may be just as affordable as the student housing on campus.
PBSA investments are global real estate ventures
While the growth of the PBSA market has been greatest in the UK, there has been increased movement in other markets as well. There are more projects being developed throughout Europe, such as in the Netherlands, Poland, and Germany. Projects in China are also underway, and the US, traditionally viewed as a difficult market to enter for PBSAs, have seen traction. Pretty much anywhere there is a growing university population, investors are looking into potential PBSA developments.
Diversity your real estate holdings with PBSAs?
The UK market is probably the most mature, while other locations are still gaining momentum. Nevertheless, you need to make sure you understand the fundamentals of PBSAs in the locations you’re interested in before investing. O you can find a fund that focusses on PBSAs. Either way, you should consult with a trusted advisor, like Richard, who has experience in these types of investments first.