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While decent accommodation is a key part in universities’
marketing strategy to attract new students, only around 18% of students are
currently living in university operated halls, and there remains an acute
undersupply of student accommodation in many regions. The ‘commercial’ student
accommodation sector is one of the fastest growing sectors in the property
market and there are now over 200 commercial
PBSA operators in the market. Over the past few years there has been a
dramatic change in the balance of supply between institutional and private
providers in the student accommodation sector – AMA estimate that in 2016 some
46% is now accounted for by private providers (equivalent to over 270,000 bed
spaces) – and a large portion of the shortfall in university owned
accommodation is expected to continue to be met by commercial providers going
forward.
“In recent years,
there has also been a marked shift in the type and range of PBSA, with commercial operators focusing on the
development of more expensive accommodation, most notably premium cost studio
flats, with luxury accommodation offering features such as wall mounted flat
screen TVs, boutique styling, designer furniture and VIP Bars, also coming onto
the market”
said Andrew Hartley, Director of AMA Research. “This type of ‘high end’ accommodation, aimed at attracting overseas
and the wealthiest students, is unaffordable to many, and the concern is that there
has been a continued decline of affordable accommodation, particularly
self-catered non-ensuite rooms in cluster flats.”
In 2016/17, the outlook for the student accommodation and
higher education sector in general remains positive, with student numbers
expected to increase with the removal of the cap on student numbers. This is
likely to benefit mid-high ranking universities, with developers targeting
universities with large student populations such as Portsmouth, Aberdeen, Liverpool and Coventry, and is also expected to trigger rapid growth in the
number of overseas students coming to the UK.
Universities are expected to continue to face
considerable funding challenges
over the next decade, while the PBSA sector has seen an increase in investment
from overseas in the past couple of years, with the bulk of investment activity
shifting from UK owner-operators to private equity firms, and also now onto
global institutional investors. In the longer term, the accommodation market is
forecast to remain characterised by undersupply in many of the major university
towns across the UK, and growing student numbers - overseas student numbers
alone are forecast to rise to 870,000 by 2020 – will ensure that the pipeline
of new developments will remain buoyant over the coming years and according to
AMA is forecast to grow to over 20,000 bed spaces per annum by 2020.
The ‘Higher
Education and Student Accommodation Construction Sector Report – UK 2016-2020
Analysis’ report is published by AMA Research, a leading provider of market
research and consultancy services with over 25 years’ experience within the
construction and home improvement markets. The report is available now and can
be ordered online at www.amaresearch.co.uk or by calling 01242
235724.
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