Student digs become big moneymakers

Yao Meng, a finance graduate from a college in Manchester, UK who graduated in 2012returned to Shanghai to work as a financial analyst in 2012. Now, with four years of experience in investment and market analysis under her belt, she is convinced Manchester is a potential investment destination.

She plans to visit the English city soon to check out a planned new project for student accommodation. She says she also wants to see for herself the changes, if any, in the student housing market since she left the city in 2012.

"Back then, it was really difficult to find a decent place to live. Students' budgets are often quite limited. Housing supply was also short, so rent was expensive. I moved three times during my two-year stay. It was so time-consuming and tiring," she says.

If Manchester meets her expectations, she says she will invest up to 120,000 pounds ($155,000; 140,000 euros) of her savings in the project. She hopes to reap an annual yield of more than 7 percent.

"My experience as a student tells me that good-quality yet affordable exclusive housing projects would be welcomed by international students, whose numbers are growing by the year. Housing that is better than dormitories and more affordable than rented apartments is likely to be popular among students," she says.

A research note from property consultancy Knight Frank says the student housing market is one of the most investment-worthy categories, attracting a record 183 million pounds in investments in 2014 and more than 500 million pounds in 2015.

Even sovereign wealth funds and funds for high net worth individuals are investing, the note says.

The trend is taking place in Australia as well. "Education is one of Australia's largest exports, just behind mining and commodities, and the number of international students continues to rise. Thus, it's not surprising to see more capital chasing student housing," says Elsa Yep, a Sydney-based real estate agent.

Students such as Zhang Ling, 23, who is majoring in business at a London college, are attracted to exclusive housing projects because they are more "cost effective", convenient and provide a venue to meet more people. Her single room of 16 square meters costs 180 pounds per week.

"First, the location is central compared with my previous suburban houses, which means more safety during the night hours. Second, it has all the facilities you need, including restaurants, laundry, entertainment, which saves a lot of time that can be used for study or to do more part-time work. Third, you meet students from more than just one college, so you can mingle with people and build up networks," she says.

Also, booking for such rooms is flexible, giving even students who enroll for summer school programs and exchange programs more choices than staying with host families.

Researchers say investors, both individual and institutional, need to consider demand, pricing and valuation of projects before they part with their money.

Student housing projects are long-term investments, not for speculative purposes or quick returns. They call for quality management and stable market demand to generate handsome returns. Risks include variables like changing ranks of institutions, safety in the city or region, and visa and migration policies.

But in the long run, student housing projects in prestigious locations and with outstanding management will emerge as a promising prospect, according to a research note from real estate company Savills.

wuyiyao@chinadaily.com.cn