Research has emerged that suggests in key cities such as Cardiff, Manchester, Leeds and Nottingham may require as many as 15,000 more student accommodation rooms to meet demand. As student accommodation demand increases at unprecedented speed developers and universities are struggling to meet those needs. Thousands of new applicants are expected over the coming academic years and as it stands many city centres simply don’t have the resources to provide them with housing. Many students are currently complaining about poor facilities at their place of study whilst the popularity of the luxury student accommodation rises.
Enthusiasm from investors has been extremely strong in recent times as high yields, good tenancy rates and low initial capital requirements entice new and experienced landlords. This has meant a surge in building and private sector investment in to building and cities that previously struggled for housing stock are now having the pressure eased as the student community opt for better and more comfortable living accommodation. As universities are having their caps lifted to allow them to accept more students this has caused a rush for premium accommodation and those lucky enough to get accepted for these ‘student pods’ are set to be in the minority unless builders can keep up with demand.
The analysis of demand is based on an overall requirement of providing dedicated student accommodation for all first year students. In Cardiff’s case it has a student population of 78,000 - of which 14,700 are international. With first year students making up a third of the total, that means a target of 26,000 students being catered for in university halls of residence or in privately owned schemes. As at June 2016 the total number of beds available in completed schemes stood at around 11,000 resulting in a shortfall in student beds of 14,500. Of these available beds approximately 8,000 are provided by the universities with the remaining 3,000 beds being provided by privately owned student accommodation operators.
There are currently eight student schemes under construction in the city will provide in total 2,452 beds but assuming the construction and in the pipeline schemes are progressed, there still remains a shortfall of approximately 9,000 bed spaces.
If Cardiff’s example is anything to go by, and we’d have to assume by those numbers that it is, then it’s not unreasonable to assume that most of the major cities are now facing a large short fall in private sector student housing. As students get larger funding grants in order to live and the majority find part time work whilst studying their income is rising significantly and with rising incomes comes rising demand for better facilities in accessible locations. As tuition fees has bred an attitude among the student community of getting the most of their money many of them are often seeking facilities that include Wi-Fi, social spaces, en-suite facilities and other extras.
The issue is also highlighted in London where In order to remain internationally competitive, London’s universities are driving resources in academic real estate. King’s College London, for example, is investing a reported £60m in to enhancing existing facilities, with a further £140m earmarked for campus developments, including a new campus in Canada Water.
Meanwhile, Imperial is developing a new 25 acre site in West London that is being estimated to come in at around £3bn, whilst LSE is investing £120m in redeveloping its existing estate.
Accommodation remains a key priority for institutions, and is a crucial element when it comes to attracting international students. The current provision of accommodation remains woefully inadequate to meet the requirements of existing student populations in London. Over 68% of existing students are unable to access purpose-built accommodation in the capital.
Many of the 179,000 students that do not have access to university or private sector accommodation are forced to rent multiple-occupation (HMO) accommodation. These students are finding it increasing difficulty to identify homes of an acceptable standard and at a reasonable rent.
Whilst there is high demand and low supply we can be sure that there will be investors keen to place their money in to a safe, high-return investment.