UK Student Housing market surpasses £8bn
As the UK student housing market passes £8 billion, we assess just how the sector has become so successful
32,000 new units have entered the booming UK student housing market, taking the total volume across the country above £8bn, according to new data from a Cushman & Wakefield report. A record 87% of these new beds were delivered by the private sector, over half of which were built with access to large common spaces such as gyms or common rooms.
The growth in supply has been driven by extremely strong investor demand. One reason for this has been the consistently good quality of Higher Education in the UK, evidenced by the country being home to four of the world’s top ten universities (QS World University Rankings 2020). As the UK continues to attract an increasing number of international students to its institutions, and with a 10% growth in total nationwide student numbers since 2012, it's evident that their strong employability records and promises of quality will keep demand growing for the UK student housing market.
Looking ahead, a total of 114,000 student beds are in the Purpose Built Student Accommodation (PBSA) pipeline for 2020/21, with two-thirds of these already having planning permission. According to Carlo Matta, Head of Europe at CA Ventures, at this current rate of development, “The national demand pool for accommodation is still increasing by around 30% faster than supply each year. This would mean that the market is likely to remain undersupplied over the next few years.”
In terms of ownership deals, the key transaction of 2019 was the Unite Students’ acquisition of the Liberty Living portfolio. This £1.4bn transaction has confirmed Unite now owns over a fifth of the private sector market in the UK, and almost as many beds as the next three owners combined. The top 10 private operators of student accommodation collectively operate 235,000 beds in the country: the undeniable benefits of a nationwide marketing platform and heightened operational efficiency that comes with scale only helps the bigger operators to consolidate and develop further. According to a 2019 Cushman & Wakefield report, “a key success factor is the fact that 42% of [the top companies’] beds are in an agreement with an institution, and over 15% of their beds are located in London. The ability of these operators to shield themselves from market competition and target the best locations is clear”.
For further discussion and insight into the UK student housing market, British & Irish GRI 2020 invites the country’s most senior real estate heads to London for discussion and high-level networking on the 20-21 May.
Article by Matt Harris