London student Pods in zones 2 and zones 5 – an update…
Towards the tail end of 2012, we informed our clients and readers of our London student pods development to be released this year. We are still on track to have something released before summer hits the shores with details of both of the London projects being ironed out as we write this.
To give an idea of where we stand at the moment, the two projects are provisionally outlined to be priced at £79,000 and £105,000 in zone 5 and zone 2 respectively. Correspondingly, the projected net yields sit at around 8% for both projects.
We are currently working on potential financing options for both of these projects, but in truth, we anticipate the sales being all cash. With the site in zone 5, we are discussing developer financing at fixed rates for a five year period but again, this is at the early stages. In any case, at prices of £79,000 per student studio, we expect mostly cash buyers at such low entry figures.
We do not expect any kind of nomination agreements with the universities, but we trust our investors will all do their respective due diligence on the investments as and when required to see that even though we will offer either a one or two year rental guarantee at circa 8% net, there really won’t be any reason to require a guarantee to see that these investments are worthwhile on land values alone. As a final point, we will not be offering either of these developments via any European based agents, so please report back to us if you see any UK or European based agent marketing or selling our investments.
Investing in London student property in Zone 2
Priced in the region of £105,000, the rooms will be between 15 sq.m to 18 sq.m, based around a cluster apartment set up i.e. 4 en-suite rooms sharing a kitchen/communal area. In this development, we foresee around 60 student bedspaces in total and will be a boutique student investment. Within close vicinity to the area you have a major university campus with large halls of residences commanding gross rents of £8000-£9000 per annum inclusive of bills. This will be a conversion from an existing building to student rooms, so we anticipate a build time of circa 12 months once planning permission has been granted. The building itself is spectacular and has a beautiful front facade. We can see this development selling out in less than a month – primarily due to location and the uniqueness of the building.
Investing in London student rooms in zone 5
A bit further out and to the West of London, this site will be a new build development from scratch and we see a 18-24 month build out once planning has been granted. Very much similar to a proposed development in Greenwich, this will be a new build student investment with up to 100 rooms. This site, however, will be the cheapest student room investment project ever released in London. Despite being a bit further away from central London, the student pods will allow affordable investment for our UK and international investors alike. The developer themselves have a historical background in development and we are excited to be working closely with them. These London student room investments will be priced at circa £79,000 with gross yields projected to be at £6500 to £7000 for an en-suite room inclusive of bills. It is a 20 minute walk or a 7 minute bus journey to the campus, but on the flip side, it is positioned within 1 minute of the tube station, which is an unexpected bonus as a long term investment. Again, these will be a cluster apartments with 5 en-suite rooms at 17 sq.m. to 19 sq.m. each sharing a common space / kitchen. On the price alone, we expect this to be very popular with our investors. If you try buying anything that is income ready in London for £79,000 on the property portals, you will soon be returning to this page!
With this development we will be incorporating a mandatory buy back clause, of which we have not yet finalised, but we anticipate it to be an end of third year policy whereby we can exercise the right to buy it back at either 100% of the initial purchase price or at 85% of the market value – whichever is higher so the clients are able to profit on the capital gains as well.
We hope to be contacting clients soon with a further update, so please check your inbox and read our emails. If you haven’t already registered, please sign up to our newsletter to the right.