Investing in the Kings Cross Lettings Market
June 13, 2011
I have been struck over the past few weeks at the strength of the Kings Cross lettings market.
As a company we invested in the Kings Quarter development in Kings Cross 5 years ago. The transport infrastructure is outstanding; 7 tube lines interchange at Kings Cross, the Eurostar is based here as is the rail network serving north of London as far as Scotland.
The planned regeneration of the old train works area to the north of Kings Cross mainline station is highly ambitious and far-reaching. The next decade will see it be a home to new retail, commercial and residential buildings, bringing tens of thousands of additional jobs, residents, students and visitors.
Part of the Kings Cross redevelopment will see the opening, in Autumn 2011, of the new campus for Central Saint Martin’s University of the Arts London (CSM). Between this and the Archway campus the university will play host to some 4,700 students and 1,000 staff.
Kings Cross already has an existing buoyant rental market and we are now seeing enquiries from overseas students planning to study at CSM. Generally speaking these students are being funded by parents who want their offspring to live in comfortable, quality surroundings within a short walk of the CSM campus.
It would be true to say that the traditional perception of students and their accommodation requirements is well out dated. The student requirement is more akin to a young professional renter – reflecting the comfortable, typically middle class up bringing now so prevalent in places such as Hong Kong, Singapore, Kuala Lumpur, India and China. The culture in such countries is to work diligently and excel in studies to repay the parents for their faith and for the opportunity to study in London. After all a London University carries much weight internationally on a CV.
The students (or rather their parents) are typically willing to pay rent 6 months in advance (as they have no UK credit history with which to be credit scored) and to leave a security deposit of 8 weeks.
We have a number of tenants across our portfolio in London who fit this profile and who behave perfectly well and keep property in excellent condition. They tend to stay in one property for the duration of their course, typically 3 years. This is a reflection on the cultural values and after all they risk the wrath of mum and dad if they do anything untoward to tarnish the family reputation.
The increase in interest from the overseas student sector is driving rents upwards in Kings Cross. Recently I have seen trends towards increases of 10% in addition to the increases achieved in 2009/10. As autumn 2011 approaches and students become more active in searching for accommodation near to the new University, I can only see the market becoming stronger.
I leave landlords with the thought that even within the Private Rented Sector, you should never dismiss ‘student’ tenants without first qualifying and understanding their profile. You may miss an excellent opportunity.