Archive news can be found at the bottom of the page

The latest student accommodation report from international property consultants King Sturge says there were over £700 million of transactions in the sector last year.

The firm handled almost all of these, the most significant of which was the disposal of the Moorfield student portfolio, involving the £190 million sale of around 4,000 bed spaces in several UK cities.

And with the numbers of students continuing to rise – there were more than 1.43 million in full-time higher education in 2007, an increase of almost 6 per cent on the previous year – demand continues to outstrip supply, with an ongoing shortage of quality student accommodation in city centres.

As rental growth continues and the total value of the UK’s 450,000 purpose-built beds passes the £20 billion mark, the report says investors have come to view the sector as being relatively secure and stable amid the current economic uncertainty.

“This year we have recorded a strong increase in the number of privately developed, purpose-built beds, up by 36 per cent since 2005 to more than

123,500,” says Philip Hillman, the national head of King Sturge’s UK student accommodation group.

“It is clear that the sector is entering a new phase of university-led development and refurbishment of existing stock, alongside an increased focus on the provision of premium accommodation for overseas students in major European university centres. And while significant opportunities still exist in London, with its supply-demand imbalance, this may be somewhat tempered by an increasingly restrictive planning regime.”

Other findings in the King Sturge study include:

• student numbers - the overall trend in student numbers is continuing upwards following a dip in 2006, which coincided with the introduction of variable tuition fees. The total figure has risen 31 per cent over the past decade, and this figure is expected to exceed 3 million by 2014.

• accommodation provision – the private sector still only provides accommodation for 9 per cent of the full-time students in higher education, while the proportion of students living at home has increased slightly to 18 per cent, but the increase has not matched many forecasts by those who were concerned at the impact of tuition fees.

• developer-operators and investors – the three market leaders in the sector remain Unite Group plc, UPP and Opal Property Group. Between them they account for more than half of the UK’s existing student beds, and the 38,000-plus which are currently in the pipeline. The report also highlights increased activity among housing associations, for example, Sanctuary’s 800-bed scheme for Queen Margaret University in Edinburgh and Signpost Homes’ new accommodation at Exeter University.

• quality of university residential accommodation – the report says en-suite bathrooms have become the norm, while facilities such as gyms, swimming pools and concierge services are also being provided.

• overseas student demand – the report notes that university applications from EU students has risen more than 14 per cent in the past two years, while the figure for non-EU students is 5.5 per cent, with London alone attracting around 32,000 Chinese students.

• key locations – outside London, Manchester has the UK’s highest student population, at around 70,000, followed by Glasgow, Birmingham, Leeds and Edinburgh. The report notes that cities such as Liverpool, Nottingham, Sheffield have seen substantial commercial development in recent years, whereas traditional college-provided accommodation continues to dominate at Oxford and Cambridge.

• the London market – London has more than 250,000 full-time students in over 20 universities and is now attracting overseas investors such as US private equity house, Blackstone Property Management Ltd., which is developing major 1,000-plus bed schemes focused on the overseas student market.

Philip Hillman concludes: “Despite the general uncertain economic outlook, more students are choosing to participate in higher education – a trend that shows no sign of slowing.

“After a period of extraordinary growth in the development by the private sector of direct-let student accommodation, the prime focus now for the private sector is for direct-let schemes in the capital.

“There will, however, continue to be large-scale developments in provincial university cities, where there is still an imbalance in the supply of good quality purpose-built accommodation.”

by: Editor

Back to News

News Archive