Demand Is Outstripping Supply, And Five Other UK Student Housing Facts You Need To Know

Purpose-built student accommodation is one of the big growth sectors of the UK property market. It is further ahead in its expansion than the residential build-to-rent sector, and is often competing for the same sites, but the dynamics are very different. 

New research from Cushman & Wakefield revealed a total of 32,000 new beds added in the UK in 2019, meaning a total of 660,000 beds overall.

Here are the six key numbers you need to make sense of a fast-expanding sector.

1. Demand Is Outpacing Supply By Around 30%

Demand for student accommodation is rising about 30% faster than number of beds developed. Birmingham provides a good example. Cushman & Wakefield recorded 23,330 purpose-built student bed spaces in Birmingham for the 2019-2020 academic year. Yet last year Birmingham City Council found that the city has a shortfall of nearly 9,000 student bed spaces: that is an under provision of 28%.

2. Private Sector Developers Are Benefiting Most

Overwhelmingly it is the private sector that is delivering the new student beds the UK needs. Cushman & Wakefield calculated 87% of beds were delivered by the private sector, equalling the best year ever for private sector participation.

3. Private Sector/Public Sector Differentials Are Falling...

The pricing differential between private sector student beds and university en-suite beds is reducing. Average private sector en-suite accommodation is now priced just 1.3% higher than the equivalent provided by universities themselves. Of course there are regional variations in rent, from a low of £119 per week in Belfast to £232 per week in London, but the narrowing differential is clear everywhere.

The average rent of a new private sector en-suite bed is £6,883 a year. 

4. ...So Expect A Slight But Temporary Dip In Development

The number of new beds set to enter the market in 2020-2021 is expected to be below 30,000 for the first time since 2015. But don’t worry, the figure will bounce back to 47,000 for 2021-2022.

The best estimate is that around 114,000 PBSA beds are in the development pipeline of which 76,000 already have planning permission. 

5. Nevertheless, Investors Still Love It

By the end of October, PBSA deals worth £2.5B had been transacted in the UK in 2019, with a further £2B deals under offer. This compares with £3B transacted in 2018.

The greatest source of capital (by transaction value) is Europe, which accounted for £895M. Home-based investors chipped in £470M, with Asia adding £359M.

6. Fun Fact: Students Like Double Beds

Student life is not all about studying. Some 95% of all beds developed in the last 12 months featured a small double bed or larger. 

You can download Cushman & Wakefield’s report here.