Building a diversified property portfolio is a fantastic way to mitigate any potential risks and improve capital returns. If you already have residential property in your portfolio, it may be time to start looking into PBSA.
PBSA’s are otherwise known as Purpose Built Student Accommodation and are developments that provide residence to university students. Generally, PBSA is a great investment for those looking for a low-cost entry into property, or a way to diversify a portfolio.
Student accommodation is usually a large, structured building which house multiple flats inside, and they generally yield an average return of 5% depending on the chosen area.
Some more benefits include the potential to avoid stamp duty and having an investment that is relatively recession proof due to the consistent need for affordable student accommodation yearly. Most students will rent out rooms between 44-52 weeks.
As previously stated, one of the most important aspects when investing in PBSA researching the properties’ location, as this can be the determining factor of the success for the investment. Taking time to properly do due diligence by checking the ranking of the local universities, the amenities located around the property and the overall student culture in the area will ensure your property is more appealing and ultimately successful.
Another way to create a successful venture in PBSA properties is to outfit the development with high specification, modern facilities. Previous reports showcased that there has been a 68% rise in levels of demand for more high-quality PBSAs. Students are wanting accommodation that is decorated, well located, and featuring modern necessities such as fast WI-FI, appliances, and extra features such as arcade rooms etc.
Purchasing PBSA off-plan, meaning currently under construction, is a fantastic way to lower the cost of entry even more as many developers will offer the development under market value. Also, depending on the developer, it may allow the investor to have input when choosing which amenities are implemented.
It was previously reported that during 2021, there were 2.66 million students, an increase over two years prior, which sat at 2.38 million- meaning there is more of a demand than ever for this type of property.
Student property prices are considerably lower when compared to residential and other types of property investment, this makes it a great option for first time investors looking for high return yields. With this type of investment, it is easy to generate high capital return and a well-rounded property portfolio easily.