Properties in some postcodes fare better than others, so we are pinpointing the best area to invest in student property in Liverpool.
When considering student accommodation investments, individuals must examine different credentials than what they would it they were investing in traditional buy to let. Whilst many invest in a traditional buy to let to achieve good capital growth, people invest in student accommodation in areas of high demand to achieve high rental yields. This is often why student property in Liverpool is popular with investors, but some properties work out as better investments than others depending on where they are situated.
There is also a lot of existing student accommodation stock in Liverpool. In 2017 according to Savills’ Student Spotlight report, there were 21,700 existing PBSA units in the city which equates to 2.1 students per unit. With additional units either under construction or granted planning permission, this ratio is set to reduce to 1.4 students per unit. This may potentially reduce the potential growth as competition is increased.
Perhaps it is the fact that Liverpool John Moores University is investing £100 million in a new city centre campus at Copperas Hill will help boost the demand. A significant floor space of 355,000 sq.ft. will be the new home for the Students Union and will also include the University’s three libraries, a variety of lecture theatres (teaching spaces, seminar rooms and IT suites) and state-of-the- art sports facilities will include an eight court sports hall, a gym and multi-use studios for dance and all other sports and fitness activities.
Before even considering a development or area, investors should either acquire good knowledge of Liverpool as a city, or work with a property investment company such as One Touch Property, who will research the area and its demographic. It is important to select developments in areas close to university campuses, because this is where students want to be living. Students don’t want to spend time and money travelling to lectures and seminars – they want to roll out of bed and step straight into the classroom.
It is also worth considering the quality of the build, the price of a unit in a development, and the weekly rent. Students are becoming increasingly discerning tenants; they want good quality accommodation at a good price. Students aren’t willing to spend £200 per week on a studio that is furnished to a poor standard, regardless of location. Whilst you want to ensure the unit you are investing in is of quality build, you want to ensure it is modestly priced so that you, as an investor, achieve a decent yield.
Features: L1 covers much of Liverpool’s city centre, including Liverpool One and Liverpool Lime Street.
Investment Credentials: Property prices in this postcode have been soaring, indicating an increasing desire to live in this area, and there has been plenty of regeneration such as that of Liverpool One, and more in store, such as New Chinatown at Tribeca Fields.
Student accommodation in this postcode not only benefits from being close to restaurants, bars, transport links and shopping centres such as Liverpool One; but L1 is also within easy reach of many university campuses.
Generally, the more central you are the higher the demand for property. Due to the demand of living in such a prime location, properties can command higher rents, which makes property investment here more sustainable in the medium term.
L1 is also the postcode to consider if you wish to sell at a profit. The average property price between 2011 – 2014 was £85,000, but between 2014 – 2015 this shot up to £120,000.
Developments: Sir Thomas House is situated on Sir Thomas Street, right in the heart of L1. Units in Sir Thomas start from £75,000, and an 8.4% rental return is guaranteed for two years. Studios in this student property investment in Liverpool are considerably bigger than studios in other developments nearby, making Sir Thomas a favourable option for students.
View our fly-through video of Sir Thomas below:
Typical weekly rent in the L1 postcode for a studio is between £120 – £150
Features: Many of Liverpool’s university campuses are in L3, including Liverpool John Moores University, the University of Liverpool and The School of Tropical Medicine. It covers much of the renovated Docklands area, and almost forms an outer ring around Liverpool’s city centre and L1 postcode.
Investment Credentials: L3 is popular with students because many of the university campuses are based in L3, meaning that they can have an easy commute to lectures and seminars.
Developments: Devon House student property is an investment within the L3 postcode. Apartments start from a modest £67,950 and promises an 8% net yield for three years.
Typical weekly rent for a studio in the L3 postcode is between: £115 – £170
Features: L5 covers the Vauxhall and Everton area of Liverpool.
Investment Credentials: It is currently receiving significant investment, such as the £150 million regeneration of Great Homer Street, dubbed as Project Jennifer. The regeneration scheme aims to bring new shops, a new supermarket, improved public spaces and new homes to the area. This will have a positive social and economic impact, and help to improve the environment. With these continuous improvements, property in L5 is becoming more and more desirable.
Developments: Phoenix Place is a student property for sale in Everton. The development situated in the L5 postcode, within walking distance of Liverpool’s city centre. Units in Phoenix Place come fully furnished, and promises a 9% yield for five years.
Typical weekly rent for a studio in the L5 postcode is between: £80 – £135
Features: L8 covers parts of Liverpool such as Toxteth, Dingle and parts of the Georgian Quarter, and lies just to the south of the city centre. It’s a lively area, with an emerging arts scene as a Liverpool-based arts project won the Turner prize in 2015 for its work in regenerating terraced housing in the Toxteth area. It’s also the birthplace of The Beatles, and the area plays homage to that fact.
Investment Credentials: There has been significant regeneration in L8, with many Victorian houses being demolished in favour of new developments. The Welsh Streets, a series of Victorian terraces near Prince’s Park, and birthplace of Beatle member Ringo Starr are in the process of being refurbished which will in turn make the area more appealing.
Currently, property prices are lower than in other central Liverpool postcodes such as L1 and L3. Yet regeneration is bound to push up prices in the area.
Developments: The Steel is a student property in Liverpool L8, that offers 8% net income assurance and is close to both the University of Liverpool campuses and Liverpool John Moores University. The development is completed and already fully tenanted, and units can be purchased from £47,588.
The typical weekly rent in the L8 postcode for a studio apartment is around: £70 – £120
It is understandable that the increased supply vs demand could stunt rental growth as there is reduced competition. However, that is to assume that the existing student accommodation stock in Liverpool will still be fit for purpose – which is not always the case. For example, Worthington Group announced in 2018 that it was going to convert North Western Hall on Lime Street back into a hotel due to the significant changes it would have to undergo to bring it up to the standard of new student accommodation offerings in the city.
Universities in Liverpool only provide beds for around 16% of their students, so there are clearly many students in Liverpool requiring quality accommodation. Not only that, but with the increased tendency to choose central locations, city centre properties are predicted to perform better than HMOs in the suburbs.
Another option that is on course for the 2020/21 student intake is Borden Court. The development comprises 119 single rooms and all amenities such as communal kitchens, dining rooms, store rooms, wash rooms and laundry facilities. The ground floor has been converted into a large shopping centre which boasts high end shops, homeware stores and eateries. This student accommodation investment in central Liverpool is completed, which means that there is not any development risk and investors can earn income immediately. It is located in the L3 post code of Liverpool – approximately equidistant between the city centre and the Knowledge Quarter where many of Liverpool’s universities have campuses. The convenient location makes it ideal for those wanting an easy commute to lectures and who also want to enjoy Liverpool’s nightlife offerings.
The continued appeal of Liverpool student accommodation for students and as an investment is dependent on proximity, quality of finish, management company and additional services provided.
In conclusion, although there are significant developments of student accommodation in the pipeline in Liverpool, older stock is either being repurposed or is in the suburbs where it is less convenient for students to get to lectures and return home after a night out. The repurposing of old student stock should rebalance supply and demand, and newly built city centre student apartments will always have the edge over HMOs in the suburbs. Liverpool student property investments can still be lucrative, providing investors are savvy and research the demand in the area.
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