A total of 32,000 new student beds enter UK market as demand rises rapidly
A total of 32,000 new beds entered the booming UK student accommodation market for the 2019/20 academic year, taking the total number up to 660,000, with transactions reaching GBP2.5billion by the end of October, according to new data from Cushman & Wakefield.
According to the research, an overwhelming proportion of these new beds were delivered by the private sector (87 per cent) – the joint-highest proportion of new privately-owned beds on record.
Some 95 per cent of all beds this year featured a small double bed or larger, with nearly 19,000 having access to large common spaces (such as a gym, study room, or common room) emphasising the student focus on overall university experience, which increasingly includes the quality of their accommodation.
The report reveals that a new private sector en-suite bed costs on average GBP6,883 per annum. The pricing differential between private sector and university en-suite beds is reducing, according to the new data. Average private sector en-suite accommodation is now priced just 1.3 per cent higher than the equivalent provided by university themselves. Regional rents vary significantly across the UK from a low of GBP119 per week in Belfast to GBP232 per week in London.
Looking ahead, a total of 114,000 student beds are in the Purpose Built Student Accommodation (PBSA) pipeline for 2020/21 and 76,000 of these already have planning permission. However, the number of new beds set to enter the market for 2020/21 is expected to be below 30,000 for the first time since 2015. This dip should only be seen in 2021, with nearly 47,000 beds currently scheduled to open in time for the 2021/22 academic year.
The report shows that at the current rate of development, the national demand pool for accommodation is still increasing around 30% faster each year than the number of beds being developed. The market is therefore likely to continue to remain structurally undersupplied over coming years.
David Feeney, UK Student Accommodation Advisory Lead at Cushman & Wakefield, says: “The momentum behind student accommodation continues, with the marketisation of the higher education sector leading to an explosion of growth in student headcounts at many institutions. Eighteen universities are now home to 4,000 more students than just five years ago. The global prestige and brand strength of the UK’s academic institutions remains very strong, and there has been 33 per cent growth in international student numbers over the past five years at the strongest STEM universities. In light of this, demand for student beds continues to outpace the overall supply pipeline. However, within that there are different levels of demand and not every market is out-performing. Therefore, it is critical to have intimate local knowledge of the different factors in putting a strategy together.”