By Daryl Loo

LONDON (Reuters) - Property investors are turning to the student accommodation sector as a would-be phoenix rising from the ashes of the UK real estate market, promising growth in returns and size for at least the next few years.

Property experts reckon average rents for UK student housing will rise about 10 percent in 2009 -- as demand outstrips supply -- and then slowly wane as investors crowd in.

Student housing is viewed as a rarity in the UK property market that still offers an attractive investment case, as more traditional commercial assets suffer falling capital values and rents, and rising tenant defaults.

"Ten percent increase (in student housing rents) per year is not sustainable in the long term when you have new supply coming on," said Philip Hillman of property agency King Sturge.

"But with the chronic shortage of student housing, rents will still rise for some time," he told Reuters.

Property broker Savills (SVS.L: Quote, Profile, Research) said it now gets about two enquiries a week from pension funds new to student housing, as rents for other assets like offices, malls and factories are forecast to fall up to 15 percent this year amid the recession.

"Pension funds had their fingers burnt in commercial assets where if a big tenant drops out, the entire building is vacant; but if a student drops out, you still have a hundred more ready to take the room," Savills associate director Natasha Ham said.

The UK student housing sector, valued at 26.5 billion euros (22.7 billion pounds), two-thirds of which is owned by universities and the rest by private operators, is about 10 percent the size of UK's total commercial property market.