A record number of new student accommodation bed spaces (30,000) were delivered in 2017, taking the total number of purpose-built spaces available to 602,000.
Cushman & Wakefield’s UK Student Accommodation Report 2017/18 looks at the student accommodation market across the UK, including demand and supply of new developments. While the numbers of newly delivered en-suite and studio spaces have both increased significantly, the supply of studio rooms has increased by 106% since 2014.
Overall rents per bed space in student accommodation increased 2.9% between academic years 2016/17 and 2017/18, marginally above the 2.7% seen during the same period in the previous year, indicating the sustained health of the student accommodation market as a whole. However, there were significant variations across the UK as well as by type and sector.
In Bristol, which is now home to 15,317 purpose-built student accommodation bed spaces, average en-suite weekly rents of £153 are the highest of any major market outside London and healthy rental increases of 4% for en-suites and 2% for studios (3.1% overall) were observed between 2016 and 2017.
The University of Bristol has grown full-time student numbers by 21% over the last five years and, whilst growth at UWE has been more muted, the University has still seen a significant increase in international student numbers. The development pipeline for student accommodation in Bristol now stands at almost 2,400 bed spaces, with half of these part of the University of Bristol’s forthcoming Temple Quarter Enterprise Campus development.
With 54% of the student body now living in private rented accommodation, the city’s two universities remain reliant on the private sector to help meet growing demand for bed spaces and the demand-supply balance of purpose-built bed spaces remains higher than the vast majority of other major UK student hubs.
David Feeney, Advisory Associate at Cushman & Wakefield, commented: “It is encouraging that the student accommodation market continues to flourish despite initial concerns following the EU Referendum and the impact of increased student tuition fees. However, in a number of cases studio development has been driven by higher prices rather than by true student demand, which now risks oversupply. En-suites and shared rooms provide a cheaper bed and more of a social experience, with communal and shared spaces.
“There is a real opportunity for developers to meet the demands for more affordable accommodation and provide more standard or en-suite rooms for students. Studios are 45% more expensive but do they offer a 45% better experience? It is all about the value of the experience and this will increasingly drive students’ preferences for accommodation.”
Student numbers vs. Fees & Brexit
More students than ever (1.04m) are studying away from home meaning the demand pool for accommodation continues to grow. Full-time student numbers are now 4% higher than in 2012/13, when maximum tuition fees rose to £9,000 per year, and continue to drive growth in the sector. Higher-tariff universities grew enrolments by 1%, with medium-tariff institutions growing by 2%, proving that despite some concern about the impact of the Brexit vote on student numbers, there remains considerable demand for new accommodation.
In terms of the investment market, final recorded transaction volumes in 2016 of £4.1bn were the second highest total on record but well below the 2015 total of £5.7bn. Transactions in 2017 to-date are ahead of this time last year at £3.61bn (£3.25bn in 2016) but unlike 2016 there is a further £1.05bn under offer and £1.5bn in the market, double the totals for last year.
David Feeney continued: “The UK is still a global education hub, attracting the best students from around the world. Even with Britain’s exit from the EU progressing, the relatively weak Pound has attracted additional applications from non-EU students, with their numbers rising 5% over the last year. It is a key market, as 23% of the UK student population is now from overseas.
“In funding terms, foreign students have a much greater impact on the income profile of UK universities, making up 26% of all tuition fee income. It is clear that the UK remains a highly attractive place for students to study and this continues to be reflected in the growing student accommodation market. The sector will continue to prove attractive to investors and if developers are able to meet student demand for en-suite rooms, rising student numbers will provide suitable and reliable returns.”
