Student accommodation is likely to prove one of the best property investment sectors over the next 12 months, according to a global property investment firm.
Despite tuition fee increases and falling availability of university places, student letting still offers a good investment return, says Kames Capital.
Good yields and high occupancy rates are the main attraction for student property investors - and the same reasons also make residential letting and care homes profitable alternative property investments, argues the firm.
"My view is that 2012 will be every bit as challenging as 2011, however there are still many good opportunities for property investors to make well informed decisions,” said the firm’s property investment fund manager Phil Clark.
"In particular I believe investors should consider a greater exposure to alternative sectors such as residential property, student accommodation or healthcare property.
"Student accommodation demand for the best universities is leading to typical annual vacancy rates of less than 2%.
“One of the key attractions of these alternative sectors is they generally have a high income yield, an ability to track inflation and have low vacancy rates."
Clark suggests investors must look at the fundamental drivers which make alternative property investments attractive compared to some commercial property.
Looking at residential property, Clark explains the south-east is going through a shift from high ownership to a need for greater rental accommodation.
"This is creating rental increases of 7% per annum in some locations, coupled with a lack of supply to meet demand," he said.
For care homes, Clark points out that a growing percentage of the population is living longer and needs specialist nursing care, while the market is not providing enough quality nursing homes to meet demand.
Kames Capital has £47 billion under management across the UK, Europe and Asia.
