The Student Accommodation Annual Report 2019 provides a unique insight into the trends in demand, supply and investment during the sector’s year to date.
2019 has been another strong year for the UK student accommodation market, with demand growth continuing to outstrip supply at a national level and 32,000 new bed spaces delivering a new level of quality stock to the market – enhancing the student experience. The long-term strength of the market is evidenced by rental increases in en-suite accommodation tracking 16% above the rate of inflation since 2014.
- 87% of all new beds delivered by private sector providers, the joint highest proportion on record
- Demand for student accommodation continues to rise around 30% faster than number of beds developed
- 114,000 Purpose Built Student Accommodation (PBSA) beds in the pipeline, two thirds have full planning approval
- Deals worth £2.5 billion transacted by end of October 2019 with a further £2 billion under offer
Growth in supply has also been driven by the strength of investor demand, with over £4bn expected to be traded in 2019, above the five-year average.
2019 has also witnessed the arrival of further new entrants, notably DWS with their acquisition of Kelaty House in Wembley and the Vita Student portfolio, demonstrating the continued attractiveness of the UK PBSA sector to global investors, even in an environment of political uncertainty.
The quality of UK Higher Education globally is evidenced by the country being home to four of the top 10 global institutions* and the UK continues to attract an increasing number of international students – an important factor as the market reaches the nadir of the UK 18-year-old population. The gravitation of students towards institutions of quality and with strong employability records is now entrenched and emerging evidence for 2020 shows continued application growth to the best universities. The ability of successful institutions to increase income and invest to stay ahead is likely to accelerate these trends over coming years.
Market fundamentals of location and value-for-money remain crucial, with micro-market knowledge essential to success in a sector where myriad factors impact the appeal of developments in individual locations. Whilst long-term undersupply is set to continue in key towns and cities, Cushman & Wakefield remains concerned about the pace of development in some difficult markets and the absence of delivery of more affordable products at scale – lower prices are currently only being delivered through the weight of competition in some markets.
Amid wider macro uncertainty, 2020 is set to see at least 25,000 new bed spaces delivered across the UK, with developers hoping to avoid issues seen with the late delivery of schemes in 2019. Health and wellbeing and the use of technology to enhance the student experience are likely to be key areas targeted by operators in a market where quality is standard.
To find out more about the stats behind the student accommodation success story and the outlook for 2020, download the full report.