The student accommodation sector remains vibrant, with a positive long term
outlook.
This is driven by continued strong demand for university places. This year
560,000 students applied for a place at a UK University. This was the first
increase for three years according to UCAS. Evidence of the continuing
appeal of university study is reflected in the fact that almost 40% of the
population of 18 year olds applied this year. It was also interesting to
note that, despite the ‘Brexit factor’ applicants from the EU actually
increased (by 1%) and applicants from outside of the EU by a record 9%
(over 60,000).
The attraction of Universities to younger people remains and it is very
positive that the appeal is increasingly widespread. Students from
disadvantaged backgrounds are 49% more likely to apply than ten years ago,
according the Universities UK. In the immediate period following the close
of clearing UCAS announced that just under 500,000 students had actually
been accepted for a place to study at university this year. This is a small
rise on previous years.
Continuing trend
The growth in the number of people studying at university seems set to
continue. The current increase has been achieved despite a historical
decline in the number of 18 year olds. 2019 is the year in which this trend
will be reversed with a growth in this demographic of 23% over the next
decade. This factor alone is forecast to result in the demand for 50,000
extra places by 2030. In addition, the continued growth in the numbers of
18-24 year olds applying combined with a reduction in University entrance
criteria is likely to increase demand by a further 300,000 (HEPI).
The impact on student accommodation
While it is unlikely that this increase demand will be met in full, it does
indicate a healthy future for student accommodation. Continued demand for a
place at University will create further requirement for student
accommodation. This can be seen in the growth that the value of the PBSA
sector alone, which is estimated to be worth £53 billion by Knight Frank.
What does this mean for Landlords?
Within this there are two trends to be aware of. One is that growth in
student numbers tends to be concentrated. According to a recent Cushman and
Wakefield report, just 10 Universities accounted for 42% of Student numbers
growth. At the same time five universities have seen a 25% fall in student
numbers.
Institutions which have seen particularly large growth in student numbers
over the last three years include, London Metropolitan University, Cardiff
Metropolitan University, Kingston University and Plymouth University. At
the other end of the scale Universities such as Roehampton, Aston and
Demontfort have seen large drops.
The other trend is the growth in the number of beds supplied through
purpose built accommodation. In 2018/19 there were over 600,000 beds spaces
available from University and privately owned stock. Once again, this is a
focused trend with 60% of new bed spaces created last year in just ten
locations. This has resulted in a downward pressure on rentals outside of
London, which is bringing PBSA rentals closer to that achieved by private
housing.
Therefore the overall positive trends will have sharp regional differences
which are impacted by the growth in local student numbers, the performance
of the University and the supply of purpose built beds.
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