November 7th, 2019Student Accommodation News
It’s no secret that the UK has become one of the most appealing destinations for students from all over the world and while this is great news for British universities, it has become increasingly difficult for them to provide accommodation for its students.
The issue has become even more apparent in the current academic year, where a staggering number of students were unable to find accommodation by the time the new term started. In 2015, the government lifted a cap on student numbers, which meant that universities were free to recruit as many students as they wanted to. On top of this, there has also been an increase to students getting their places through clearing just before the start of the new term, leaving very little time to secure accommodation with their respective university. With the influx of new students, universities have been struggling to provide enough accommodation for their growing numbers, so many new students are having to rely on private accommodation to house them during their studies.
It’s for the above reasons that a growing number of students are now turning to Purpose Built Student Accommodation (PBSA) to live in while they’re at university. In the academic year of 2018/19, the private sector accounted for half of the market when it came to student accommodation, due to the limited supply of university-owned accommodation. This figure has grown even further in the current academic year - according StuRents, a student property platform, the amount of beds in the PBSA market has increased by 5.3%, which equates to around 34,000 new beds in the market. StuRents has also forecasted that by late 2020, the number of PBSA beds will surpass university-supplied beds for the first time to date.
Naturally, a lot of investors are catching wind of the increasing popularity in PBSA and are now looking to get in on the success. Although investment into PBSA has been somewhat inconsistent in different parts of the UK, 2019 saw global investment into the sector reach an all-time high. According to a study by Knight Frank, global PBSA investment is now worth around US$15.9bn - the highest figure ever recorded in their data.
It’s clear that universities have been overly ambitious when they came to recruiting new students in recent years and as a result, it has paved the way for PBSA to play a key role in the student market. As it is becoming more difficult for student tenants to secure university-owned accommodation, we will see a growing amount turning to PBSA, where they will be provided with high-quality accommodation that also provides the same benefits of university-owned accommodation, as well as added luxuries such as on-site gymnasiums and games rooms. Investors should certainly be taking advantage of this huge demand for PBSA and look into student accommodation as their next investment opportunity.
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