Investment in purpose-built student accommodation (PBSA) in the UK is set to soar to £6 billion, with demand continuing to outstrip supply.
Summary:
- £4.5 billion has been invested in the UK student accommodation market, with an estimated £6 billion expected by the end of the year
- With £2.7 billion invested into the sector in 2014, the past year has seen that value more than double
- The increase in students, particularly those from overseas, has seen the demand for PBSA outpace supply
Investment in the UK student accommodation market has reached a record £4.5 billion in 2015 and could reach £6 billion by the end of the year.
This figure eclipses the one seen in 2014, when £2.7 billion was invested into the sector, the research by Cushman & Wakefield shows.
The most investment activity has been seen in portfolio sales this year, with sales triggered by a range of factors including distress, profit taking and portfolio reconstruction.
Mike Mitchell, Senior Director in Cushman & Wakefield’s Education Team, said: “This has been a ground-breaking year for the UK student accommodation sector. It is thriving, with liquidity driving investment volumes higher than ever before. Residential facilities play a crucial role in attracting students, now subject to £9,000 a year tuition fees, who have decided they should have a quality residential experience that supports their academic and social experience.”
Supply of purpose-built property has grown sharply and reached a peak of more than 539,200 beds in 2015, up by 19,300 on 2014. Room numbers are expected to grow at a healthy rate, but rents have also risen by 6%, illustrating the continued undersupply in the market.
The ongoing supply-demand imbalance is due to the increase in full-time students in the last decade, which has increased from 61% to 74%. The total number of international students, a group who favour privately rented student accommodation, has increased by 36.8% and totalled 436,000 in 2013/14.
