The UK property market is showing remarkable resilience, with student accommodation and Build to Rent (BTR) emerging as the most secure investment options, research reveals.
That’s according to Excellion Capital’s latest investment yields index which reveals that these sectors boast yields below 5%.
That, the firm says, signals high asset values and dependable income streams, making them prime targets for cautious investors seeking stability.
The analysis of March 2025 rental yields across 13 property sectors highlights the dominance of residential-focused assets.
Low-yield investments, such as student housing and BTR, offer predictable returns and attract competitive financing rates due to lower lending margins.
Investors must consider yield
The firm’s vice president of real estate, Robert Sadler, said: “For property investors, yields must be considered with real nuance.
“Low-yield assets are often considered as the most lender-friendly because they indicate a high asset value, steady and reliable income and, therefore, relatively low risk.
“However, the lower the yield, the lower the quantum of debt that can be supported by the asset.”
He added: “Lenders are most concerned with the long-term value of an asset rather than the income it generates, they’re going to be far more willing to lend at attractive rates – albeit lower leverage – for low-yield assets and be incredibly wary of the more unpredictable, erratic high-yield concerns of the market.”
Student housing yields
Excellion’s research shows that student accommodation leads the pack with an average yield of 4.3%, down 0.25% from last year.
Prime London student housing delivers even tighter yields at 4%, while regional prime markets offer 4.25%.
This stability underscores the sector’s appeal for investors prioritising security over high returns.
The BTR sector remains a cornerstone of stability, maintaining an average yield of 4.5%, unchanged from 2024.
In Greater London’s prime market, yields dip to 4.25%, while regional single-family BTR and Tier 1 regional city BTR assets hold steady at 4.5%.
PRS yield in London
Excellion also reveals that prime London’s co-living market yields a low 4.25%, compared to the sector’s 6.32% average.
The warehouse and industrial sector averages 5.28%, with Greater London estates at 4.75%.
London’s PRS yields 4.76%, while data centres and prime regional co-living hit 5%.
For risk-tolerant investors, shopping centres yield 9.13%, with local and neighbourhood centres at 10% and sub-regional at 9%.
Real estate quirk
Mr Sadler said: “It’s certainly a quirk of the real estate investment market that higher income relative to asset value is not always seen as a good thing.
“That being said, investors don’t have to reject high yield options entirely.
“A high yielding asset is technically riskier than a lower yielding asset – all other things being equal – but, as Warren Buffet says, risk comes from not knowing what you’re doing.”