Real estate investment remains the preferred investment. And among these investments, service residences are very successful, thanks in particular to strong demand for housing by students and longer life expectancy. Compared to other investments, buying real estate in a student city will bring you a higher annual yield. Another advantage: the rents collected by the owners are guaranteed. Whether your home is occupied or not, the operator of the student residence is obliged to pay you your share of the rent. You will not face any rental vacancy which could have the effect of reducing the return on your investment.
The steady rise in the number of students - the 3 million marks should be reached in a few years - strongly boosts the student housing market. Overview of the most sought-after cities.
In Malaysia, students aged 18 to 24 are spread across the territory, between metropolises (Kampar, Kuala Lumpur...). Training offer, the dynamism of the job market, geographical location, living environment, infrastructures... The attractiveness of cities varies according to multiple criteria, to be taken into account when one decides to invest. Some, for example, benefit from a privileged geographic position. With strong partnerships with renowned universities all over the world, the Malaysia Capital of Culture is fast becoming international and has nearly 108,200 students in 2017.
With up to 155,440 students on the clock, the city welcomes 30,000 more students than 10 years ago. The student city in Malaysia after Kuala Lumpur; Kampar offers many opportunities for investors.
As you already know, these 2 cities have one thing in common: they are all 2 of the student cities.
Kuala Lumpur: more than 10 million inhabitants, including more than 600,000 students. It is the largest cities in Malaysia in the number of students, and the number of universities and colleges.
Kampar: more than 40,000 inhabitants including 2,000 students. Indeed, there is in this city an antenna of the Tunku Abdul Rahman University. When property returns to the rental market (when a tenant leaves), the majority of applications received come from students... and I must admit that it is a population that every investor generally only prefer, mainly for following reasons.
- It is very often that parents who pay the rent
Parents are paying rent for their offspring, and therefore investing in the success of their studies, it rarely comes to their mind not to pay rent.
- All surfaces are commendable to students:
Houses or large apartments can be converted into roommates and be suitable for this tenant population
So why is it worth investing in student cities?
1 Student cities are attractive
Usually, student cities are full of restaurants, shops, and there is usually a fairly rich cultural life (compared to non-student cities), public transportation, and so on. Moreover, these are cities that have a high score of what the Anglo-Saxons call "walkability", namely pedestrian accessibility. All these aspects enhance the real estate heritage, and therefore are a strength for the attractiveness of your property, and facilitates the rental or sale.
2 There are many candidates for rent in student cities
A "student" city is not exclusively student. So the tenants market is composed of students, certainly, but also other socio-professional categories. The fact that the city is a student enlarges the population of potential candidates for rent compared to other cities.
3 Rental tension is high in student cities
Because there is a constant demand for renting in student cities, you can practice attractive rents, and rental candidates have the budget for housing. What is rental tension? This is the measure, on the one hand, of the facility to find a rental or a tenant and, on the other hand, the capacity of the tenants compared to the rents practised.
4 Holiday rates are low in student cities
This point is consistent with the points mentioned above but deserves to be quoted individually. A student city multiplies the chances of renting its property. (The rental vacancy is one of the main fears of landlords).
But you would think that with a student our property will be empty all summer! But that's not what happens in reality:
- Students do not leave their apartment on the same day their school year ends.
- Students are looking for accommodation well before school starts! And considering that in the student cities the rental demand is tense, they look for the month of August and take possession of the premises well before the re-entry to be sure to have their home for the year and settle down quietly.
In addition, many students keep their home 2 or 3 years, all through the time of their course, so in these cases, there is a very little vacation. And when a property has been occupied for 2 or 3 years, it is good to recover a few days, between 2 tenants, to practice minor work (repairs of use, cleaning, etc.). So a few days of vacation can be useful for the owner.
Investing in a student residence city can be particularly profitable if you make the right choices. With an experienced operator and an ideal location, you are sure to get a satisfactory return with your real estate investment.
Feel free to comment on the article, and tell us if you would be interested or not to invest in a student city! Or to share your experience.
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