UK Student Accommodation Continues to Grow - But are Standards Higher than Ever?
UK student accommodation will see significant growth over the next few years, particularly in the country’s capital, reveals new information from CBRE. With the number of students at UK universities continuing to outweigh the number of student properties, private sectors are taking full advantage. Private sector student housing accounts for 40% of student accommodation, and this figure is set to rise as universities struggle to keep up with demand. Last year alone, investment in student housing in the UK reach £2.7 billion according to CBRE. They projected significant growth between now and 2015, with 3000 beds in the pipeline for 2013, as well as 6300 in 2014 and 3800 in 2015.
Head of Student Advisory at CBRE, Joan Winchester said:
“The significant pipeline in London emphasises that exact location will become even more critical for further development as well as accurate rental strategy. However, if the rate of new development becomes constrained, values of existing stock should hold up and student housing still offers one of the best opportunities for stable, growing income returns of all the non-mainstream property sectors.”
Student housing continues to be a stable investment in 2013. In 2012, 5500 purpose built student units were built in London, and despite the rise in tuition fees, the demand for student housing is set to rise, and the large development blocks are likely to take hold of other UK university cities.
“The student accommodation market remains attractive to domestic and more recently international investors due to the higher achievable total returns compared to traditional property asset classes,” She said.
However, it’s worth considering what effect these large scale developments will have on private landlords in the student accommodation sector. Ben Hall, Managing Director of www.Student-furniture.co.uk notes that these developments have pushed universities into raising standards of Halls of Residence, and so the competition for smaller private landlords is tougher than ever. He refers to these developments as ‘Super Halls’ and points to the fact that students with considerable financial backing will have higher standards when it comes to student accommodation.
“Universities are spending millions on new buildings in the fight to attract students - including campus hotels, better bedrooms and even an overseas student village planned by one university,” said Hall. According to him, landlords must adapt properties in order to compete:
“So the question is, what should landlords of private student accommodation be doing to give their rentals a fighting chance in such a competitive market? It’s simple. Make your student properties fit for the young professional market – which is the minimum standard of accommodation students are now willing to consider.”
Whilst the rise in tuition fees in the UK hasn’t affected the need for student accommodation in university cities, it may well have changed what it is that undergraduates expect from a student property.
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Written by @SarahzhDavis