Increasing Demand for Accommodation Threatens University Reputations
The reputation of universities in the UK is at risk due to the increasing demand for accommodation that far outpaces the available supply, warns a recent analysis conducted by global real estate advisor CBRE.
The study, which examined supply and demand data across the 30 largest university towns and cities, highlights the substantial gap between the number of student beds available and the growing demand for student housing.
Within the realm of university accommodation, Greater London stands out as a glaring example of this crisis.
The research indicates a staggering supply gap of 106,000 beds in Greater London alone, representing a remarkable 45% increase since the academic year 2017/18. The shortage is not confined to London, however; major university towns across the UK collectively face a scarcity of over 350,000 beds, exacerbating the challenge.
CBRE's analysis sheds light on the complex dynamics between supply and demand within the student accommodation sector.
While some markets have managed to maintain a balanced ratio, others struggle with a persistent imbalance.
Tim Pankhurst, Head of Student Accommodation Valuation at CBRE, explains, "Not all markets are experiencing chronic shortages right now. Some are seeing more delivery than growth in terms of unmet demand, and some markets have sustained levels."
However, the research underscores that regardless of where the market stands in its cycle, a clear and urgent need for more accommodation persists.
The data paints a stark picture of the mismatch between the pace of housing delivery and the rapid expansion of the student population.
Universities in cities such as Bristol, Glasgow, Nottingham, Manchester, and Liverpool are facing the brunt of this discrepancy. In Bristol, for instance, only 2,900 beds have been added since 2018, while the demand for Purpose-Built Student Accommodation (PBSA) has surged by 8,000 in the same timeframe. Similarly, in Glasgow, 3,400 beds were delivered since 2018, but the demand has surged by over 13,000.
Oli Buckland, Head of PBSA Transactions at CBRE, emphasizes the urgency of addressing this housing crisis.
"This gap we’re seeing between supply and need for PBSA highlights the mismatch between the pace of delivery and growth in the student population and the chronic need for accommodation," he notes.
Buckland emphasizes the potential for investors and developers to capitalize on the opportunity to meet the burgeoning demand. However, he also warns that those who fail to act now could face costs due to the scarcity of opportunities and the strong demand in both rental and investor markets.
CBRE's analysis also points out that prime locations like London, Bath, Bristol, and Manchester present greater opportunities for rental tension compared to secondary locations.
The robust rental growth in these areas is anchored by consistent demand and supply fundamentals, along with stabilizing operational costs.
In the face of the rapidly growing student population and the persistent shortage of accommodation, universities and policymakers must collaborate with real estate stakeholders to find innovative solutions that safeguard their reputations and ensure students have access to suitable housing options.
The CBRE analysis underscores the critical need for swift action to bridge the widening gap between student accommodation supply and demand.
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