Universities are big business. Not only do these huge institutions employee thousands of people and help produce future business leaders, but they’re all having a huge impact on the local property markets.

And in London, the impact is felt even more strongly. With four of the capital’s universities ranking in the Times Higher Education World University Ranking’s top 40, it’s no surprise that Phil Baty, the ranking’s editor, says the UK is “punching above its weight” in higher education globally.

Going global

It’s this global aspect that’s really setting London apart from other cities. Overseas students who study in the capital contribute a massive £3 billion to the UK economy, according to a report by London & Partners.

And a large part of this £3bn goes on student accommodation. Take Imperial College, the highest ranked London university - so high is the demand for property around the campus that a mini-property boom has been created.

“We have a constant stream of flats coming on to the market,” says Strutt & Parker’s Natasha Whalley of the area between Kensington and Knightsbridge. “They are bought for three to five years while the students study and then sold when they leave.”

High-end apartments in demand

And these aren’t the dingy student digs first made famous by TV’s The Young Ones – these are high-quality apartments with prices ranging from £500,000 up to £2 million.

“Location is paramount,” adds Natasha. “All of the properties have to be within walking distance of Imperial College. The courses can be demanding and families want to make everything else as stress-free as possible for their children.”

University College, which is the biggest recruiter of international students in the UK, has helped created a property hotspot for a certain type of home around Covent Garden and Bloomsbury.

This is thanks to the nearly 12,000 overseas graduates and undergraduates it welcomes every year.

“Two-bedroom flats are the most popular – either to share or to have a spare room if the family comes to stay,” says Natasha. “Secure modern blocks are at the top of the wish list for most buyers.”

And it’s not just current students that need living space – parents are actually buying properties years in advance in the hope that their children will attend the nearby university.

Can it last?

Like all property booms, there are concerns over its sustainability. But these worries aren’t over bubbles bursting and prices falling. These concerns are over changes to immigration policy, Brexit and tax changes.

It has become more difficult recently for non-EU foreign students to study, and later work, in the UK thanks to immigration changes. And this could get worse if the UK was to leave Europe.

On top of that, foreign demand for London property has been under pressure since 2015 as a result of the economic slowdown across economies like China and Russia, according to Nina Skero, Economist from the Centre for Economics and Business Research.

She adds: “Tax changes have also made it more expensive to buy prime property. Dis-incentivising overseas buyers further by making it more difficult for their children to study in the UK may slow house price growth.”