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STUDENT ACCOMMODATION
Investment Highlights
Low entry price – £75,700 (en-suite) £85,000 (studio)
Fully furnished (included in purchase price)
11.1% gross, 9% net return on cash invested
First year rental guaranteed by the development company
Strong potential for capital growth
London is ranked 1st in UK to invest in student property (Knight Frank 2011)
Real estate investment in a city which has worldwide appeal
Demand for student property well in excess of supply
Only 52 luxury studios & 10 luxury en-suite rooms
Excellent location in Greenwich
Only 0.5 miles from the University
Hands off investment – fully managed for only 8% of rental income
Inflation beating income
250 year leasehold interest
Introduction
On offer is an inflation beating, high income student investment opportunity in Greenwich, London. In a city home to more than 290,000 full time students across 40 different educational institutions, this investment is ideal for those wishing to increase their income whilst also benefitting from the huge worldwide demand for property in London.
Currently there is a shortfall of some 100,000 student rooms across London, particularly in central locations. For the discerning UK and overseas student, this boutique development, comprising 62 studios and en-suite student pods will offer a luxury accommodation option and a fresh alternative to large, overcrowded halls of residence and private housing in the area.
Rents in the student sector have increase by 5% per annum over the past 6 years which when compared to 0.6% for the commercial property market as a whole, is a strong performance. Additionally, occupancy rates for student property are extremely high.
Location
Tunnel Avenue is located just 0.8 mile from Greenwich University which has over 13,000 students and 0.5 miles from Ravensbourne College which has approximately 1,600. The development is also ideally located for students studying in two of the most distinguished further education centres for the arts, drama and dance: Bird College and Rose Bruford College.
A guide for approximate locations and distances from the development is as follows:
The Development
The development will be new build with a completion date of November 2012. Given the timeframe and the proximity to the new academic year, the developer will guarantee the first year’s rent. Details about the developer are attached at the back of this document.
The accommodation will be built to a high specification providing facilities over five floors. Each floor will have a number of communal kitchens and living spaces. The development will also provide office facilities, on site laundry, bike storage and a management office.
Accommodation
The student accommodation includes the following:
There is also an unparalleled list of amenities within the development including:
Financials
These student pods offer an excellent return on your investment, well above the average rental yield. Furthermore, the management company in place will provide its expertise at a very competitive rate of just 8% for full management. This reduces your costs significantly and still means you should achieve a net rental yield of at least 9% in a prime London location with little input on your behalf.
Cash Flows
| Student Studio Apartment | Amount |
| Purchase Price | £85,000 |
| Gross Income (51 Weeks @ £185pw) | £9,435 |
| Gross Yield | 11.1% |
| Maintenance & Expenses | £995 |
| Management Fee @ 8% | £755 |
| Net Income | £7,685 |
| NET YIELD | 9.04% |
| 1 Bedroom En – Suite Student Pod | Amount |
| Purchase Price | £75,700 |
| Gross Income (51 Weeks @ £165pw) | £8,415 |
| Gross Yield | 11.1% |
| Maintenance & Expenses | £927 |
| Management Fee @ 8% | £673 |
| Net Income | £6,815 |
| NET YIELD | 9.00% |
Capital Growth and Income
The capital value of these studio pods should increase in line with rents and given the demand for student accommodation in London, it’s a fair assumption that rents will increase in-line with demand and also inflation.
If rents increase by 5% per annum (as experienced over the past 6 years), compounded over 5 years, then the gross rent would be:
£9,435 increasing by 5% per annum = £12,042
£8,415 increasing by 5% per annum = £10,740
Presently the gross yield is 11.1%, so to maintain that yield, the capital value would increase to:
Rent divided by yield = capital value = £12,042/11.1% = £108,486 (studio)
Rent divided by yield = capital value = £10,740/11.1% = £95,757 (en-suite)
The point is that these units will increase in value in line with rents as their capital value is determined solely on the rent it produces.
Further, given the very strong rental returns, it may be possible to offer a unit for resale at some stage in the future once the investment is more established. For instance, if you wished to ‘sell on’ with a gross yield of 9% which is still very attractive, particularly in London, then the calculation in the example above would be:
Rent divided by yield = capital value = £12,042/9% = £133,800 a capital gain over 5 years of £48,800 or 57%.
Financial Summary
The calculations are designed to illustrate the potential with this type of investment. It is primarily an income investment and at the same time protecting capital from the destructive nature of inflation. However, as rents are forecast to increase in this sector and given it’s in London, then a strong capital return is a realistic projection.
Conveyancing
We are pleased to offer a competitive conveyancing package of £680 (inclusive of VAT and all disbursements).
The Buying Process
1. Reservation
A £5,000 reservation deposit plus a sourcing fee of £ 2000 per unit will be required in order to secure the investment and take it off the market. In the event that planning permission is not granted for the development then this deposit will be refunded to you in full.
Upon receipt of the reservation form and processing of your deposit, a sales pack will be sent out to your Solicitor within 21 days.
2. Exchange
Upon notification of receipt of planning permission, exchange and completion will occur within 21 days. Investors will then be required to pay part of the total purchase price at the point of exchange and completion.
Relevant contracts and leases will be forwarded to your Solicitor, giving sufficient time to review them and raise any queries you may have.
3. Construction
Full construction has been contracted to be completed on the given completion date. A fully comprehensive insurance policy will be taken out to protect all investments.
Architects will be instructed to inspect and approve particular stages of completion of the build.
Required funds are to be disbursed from your Solicitor to the contractors at this point.
4. Certificate of Completion
Nearing the end of the build process, a certificate of completion will be issued, as will a final architect’s certificate. Both of these certificates will then be forwarded to your Solicitor for verification purposes.
Investors will be given a notice period of two weeks prior to the practical completion of the development. From this point there will be a 28 day window to forward the remaining balance due to your Solicitor.
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In Association
