Last year’s (2021) Student Accommodation Annual Report reveals that the purpose-built student accommodation (PBSA) market has been remarkably resilient over the last couple of years despite the shadow of COVID-19, as the number of new beds increases, and the development pipeline remains strong.
Overall, there is great optimism for purpose-built student housing as the UK continues to be a global leader in academia despite any pandemic after effects. The industry as a whole was then worth over £60 billion and continues to be the preferred alternative asset for investors.
The UK’s sustained status as a global powerhouse will be one of the main factors influencing its desirability in the medium term.
Last year, over 30,000 specially constructed student beds were built, more than double the 14,000 that were finished in 2020 when the pandemic hampered construction. These latest additions bring the total number of specially constructed student beds in the UK to over 700,000.
It is anticipated that an additional 21,000 beds will be available in time for the 2022 academic year. Our projections indicate that if constructed, this would increase the size of the UK student market to a total of £72 billion.
Following lower than anticipated occupancy rates and rent collection in 2020–21 as learning switched to online and mobility limitations impeded students’ ability to travel. This academic year (2021-22) the sector has surpassed expectations as students return to campus. Average occupancy levels of over 90% have been reported.
There was a significant amount of overseas capital in UK student housing in 2021, with key transactions including purchases by Blackstone, Greystar, and Mapletree. Over £400 million was invested in UK student housing by investors from Asia in 2021.
Investors are now focusing on a bigger prospective student pool. According to UCAS’s (Universities & Colleges Admissions Service) most recent application statistics, student enrollment has increased beyond pre-Covid levels. The number of non-EU candidates who were accepted has increased by 3% year on year.
Future population growth among university-age students in the UK is anticipated to boost the number of 18-year-olds by more than 160,000 over the next ten years, supporting the longer-term picture for demand.
Along with the lack of student housing in the UK, continuous market risk and uncertainty are major factors in the continued investment in student assets. It also reflects a broader shift towards residential assets that institutional investors have made over the last 18 months.
Market surges despite economic uncertainty!
- With an increase in student enrolment amid a period of economic turbulence, UK purpose-built student accommodation (PBSA) has persisted in demonstrating how robust this market actually is.
- The demand for domestic students is at an all-time high, while the availability of housing in the private rental sector (PRS), like HMOs, is limited and declining.
- According to the most recent UCAS application statistics, both domestic and high-value foreign student populations are continuing to expand.
- There is also huge positive sentiment amongst investors, with a significant weight of capital targeting the sector, and demand for student accommodation portfolios actually outweighing the supply of stock.
online sources: knightfrank.com, savills.co.uk, yahoo.com All opinions and views expressed or suggested by the Digital Zeitgeist are not necessarily the same opinions and views held by or suggested by GPM-Invest plus any and all partners, affiliates, parties, or third parties of GPM-Invest. Any type of media distributed by GPM-Invest IS NOT financial advice. Please seek advice from a professional financial advisor