February 26th, 2020
Since Student Number Controls were removed back in 2015, many universities have seen a huge surge of interest from students and now UK higher education is larger than ever, with around 1.84 million students currently studying at UK universities. According to the most recent Student Accommodation Report by Cushman and Wakefield, the number of students in the UK has increased by 2.6% in 2019 and the October deadline for UCAS applications suggested that there has been a 4% increase in applications for the 2020/21 academic year.
The fastest growing university in the UK is Coventry University which saw a 49% increase in the number of students in the space of five years. This was followed by University College London (46%), De Montfort University (42%), The University of Liverpool (35%) and Kings College London (31%). These five institutions have capitalised the most since the removal of Student Number Controls and have collectively seen their student base increase by approximately 41,000.
The UK also continues to be popular with international students - in their report, Cushman & Wakefield found that applications from students overseas had increased by 6% and now, international students make up 23% of the entire student population, most of which are from outside the EU. In the last decade, UK universities have invested a lot into expanding their activities on an international level and it is certainly paying off - as it stands, the UK is second only to the USA when it comes to attracting international students. This surge in demand from international students has come at a crucial time for UK higher education - the number of 18-year-olds in the UK is currently at its lowest level , so there will be a smaller demographic of domestic students who will be applying for the 2020/21 academic year.
Naturally, the rise in demand from students means that there is a greater demand for student beds. In Cushman & Wakefield’s report, there are currently around 660,000 student beds in the UK (50% of these are university-owned) and 114,000 beds in the pipeline. However, Cushman & Wakefield also found that at the current rate of development, demand for these beds is 30% higher than the number of beds that are actually getting delivered into the market. This surplus in demand is creating an excellent opportunity for those looking into investing in Purpose-Built Student Accommodation (PBSA) and if the figures from Cushman & Wakefield are anything to go by, there was a clear appetite for PBSA in 2019. Cushman & Wakefield reported that by the end of October 2019, £2.5bn had transacted in the PBSA sector, and while this is lower than the £3bn recorded in the same period of 2018, it is believed that there is a further £2bn under offer. If all those assets have transacted since the figures were recorded, the value of these transactions will now be worth over £4bn.
The past few years has been very successful for the UK higher education sector and PBSA sector and there is no sign of this dying down in the foreseeable future, so investors should seriously be considering student accommodation as their next investment venture.
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