The student accommodation market in the UK

The student accommodation market in the UK

Investors

The demand for UK Higher Education to keep rising:
  • Consistent growth in demand for Higher Education from both domestic and foreign applicants (+42% over 10 years)
  • Demand has remained robust throughout the introduction of increased tuition fees in 2012 and the weakened economic environment
  • Increased student mobility driving demand for accommodation away from parents
  • Number of international students is expected to double globally by 2025
Student Accommodation is a Robust Asset Class
  • UK student accommodation yields have remained relatively stable since 2006, suffering less volatility than other real estate sectors
  • Student accommodation rental growth in the UK of 90+% between 2006 and 2012 has surpassed all other real estate asset sectors and significantly outpaced RPI
  • Total investment in the UK student accommodation sector surpassed £2 billion for a second consecutive year in 2013, increasingly from international sources and over £2 billion forecast to go “under offer” by the end of 2014. 65% of transaction values in 2014 have been for assets outside of London.
Tenants: Undersupply of student accommodation in key cities
  • Purpose-built accommodation remains well below student numbers in key UK university cities and does not support the strong demand
  • The unfavourable supply situation does not only affect London but also the key university cities in the regions
  • University places are being held back by lack of student accommodation
  • Postgraduate / sponsored students are often required to live in purpose-built accommodation
  • Today’s students want “plug & play” accommodation (bills, internet etc.)
  • Downward pressure on Houses in Multiple Occupation (“HMO”) provision

 

Student Accommodation Market Opportunity