{"id":74419,"date":"2020-09-04T12:12:48","date_gmt":"2020-09-04T11:12:48","guid":{"rendered":"https:\/\/sevencapital.com\/?p=74419"},"modified":"2020-09-04T12:12:49","modified_gmt":"2020-09-04T11:12:49","slug":"why-invest-university-cities","status":"publish","type":"post","link":"https:\/\/sevencapital.com\/investor-resources\/why-invest-university-cities\/","title":{"rendered":"Why Invest in University Cities and Towns?"},"content":{"rendered":"
A question we\u2019re often asked is: why invest in university towns and cities?<\/p>\n
The education sector has always been an excellent signpost for investors seeking above-average tenant demand for a Buy-to-Let investment.<\/p>\n
Within the sector there\u2019s two main groups to consider – students and graduates. Students are fairly self-explanatory in that they mainly contribute to the rental market in the area. Graduates, on the other hand, can have a much wider impact in the long-term.<\/p>\n
Graduates from top universities will typically want to stay in the area (or at least nearby) if there are good career opportunities on hand. As you\u2019d imagine, many businesses have identified this demand and share the same spaces as these top educational centres.<\/p>\n
Fortunately for investors, because these areas are used to accommodating large numbers of students, the amenities on hand are also beneficial for graduates, helping maintain the lifestyle they\u2019re looking for.<\/p>\n
These graduates are important because they inevitably become the young professionals that rent – making up a huge percentage of the current UK tenant demographic.<\/p>\n
This means for investors, university towns and cities represent an opportunity to tap into both the student and professional rental market, depending on the chosen strategy.<\/p>\n
The fact is, universities drive demand and the UK is home to some of the best in the world.<\/p>\n
One of the top ways to measure graduate demand is using the \u2018Salary\/Rent Value Index\u2019 (SRI). This takes into account the average monthly salary that graduates can expect and measures this against the average rent, which eventually builds out the final SRI.<\/p>\n
When we measure this against the top UK cities for graduate retention, technology innovation and \u2018startup economy\u2019, the results are interesting. The top three UK cities in the SRI are Birmingham (2.03), Slough (1.91) and Reading (1.85), closely followed by Leeds, Bracknell and Newcastle-upon-Tyne.<\/p>\n
<\/p>\n
These areas are typically providing a mix of quality career opportunities and affordability that makes them ideal for graduates.<\/p>\n
Slough in particular stands out, mainly because of the excellent average salary it can deliver for its graduates. At the same time, its rental prices are relatively affordable when compared to other destinations in the South East, which obviously helps working professionals just starting out.<\/p>\n
It should be noted that these SRI positions also generally make the surrounding area more desirable. It\u2019s common for graduates to \u2018ripple out\u2019 from the city-centre alongside rent values and salaries.<\/p>\n
This is because graduates often seek more affordable areas within commuting distance of larger cities, creating more competition in the local markets and directly impacting rental values and inward investment – both key metrics for investor success.<\/p>\n
So we\u2019ve highlighted the impact graduate retention can have on the market but where are the highest performers?<\/p>\n
In terms of graduate retention, the South East has the highest number outside of London<\/a> – nearly 45% of the population in the region was classified as a graduate in the last annual population survey.<\/p>\n <\/p>\n Aside from hosting some of the top educational centres in the country, it\u2019s also the home of the \u2018UK Silicon Valley\u2019, the technological hub responsible for creating a vast array of job opportunities for graduates.<\/p>\n With top names such as Oracle, Microsoft and Dell – as well as an excellent economic forecast<\/a> and an above-average standard of living – it\u2019s no surprise that the South East maintains such a good graduate retention rate.<\/p>\n