2020 already looks to be a much more positive year than 2019 right across the property, construction and development markets. With a decisive election result in December and forecasts of increased investment into construction this year there is a lot to get excited about. Purpose-built student accommodation is one area of construction that has already seen a lot of activity in recent years. All the predictions indicate that this could be an even more buoyant market in 2020 and beyond.
Purpose-built student accommodation – the situation today
There have been many factors involved in the increase in demand for purpose-built student accommodation. Key among these is the ongoing housing shortage that continues to affect the property and construction sectors in the UK. However, housing pressures are not the only reason for the rise in demand. Another important influence has been the increase in student numbers and those looking for accommodation.
By 2030 it’s forecast that an additional 500,000 students will have started studying at UK universities. Traditionally much of the demand for purpose-built student accommodation has come from first years as well as international students. However, there is now also a spike in the number of second and third years who are keen to find a purpose-built student home.
More students than there are beds available
As a result of ongoing increases in the number of students in the UK there are now 1.4 students for every purpose-built student bed available. All over the country there is evidence that demand is outstripping supply in this market. Particular hot spots include London, as well as locations in the north of the country, such as cities in the Midlands and the northwest. There is particularly high demand for new purpose-built student accommodation in these areas, which is opening up some exciting opportunities for developers and landlords looking to invest.
Purpose-built student accommodation remains a great investment
Since 2012/13, the number of full-time students in the UK has increased by 7% to 1.84 million. Full time students account for roughly two thirds of all students and this rise is significant. In practical terms it means that there has been an additional 32,500 students entering the market for accommodation every year and this is one of the reasons why the need for purpose-built student accommodation is so high.
It’s also a fantastic investment, as student lets can create some very lucrative yields for landlords and investors. Many of the biggest opportunities exist in the areas of the country where demand is at its highest, including the north of England and the Midlands. This may well be why a third of the £8.8 billion that is forecast to be invested into living sectors during the next two years is likely to make its way into the market for purpose-built student accommodation.
Driven by property shortages, as well as increasing numbers of students, the rise of purpose-built student accommodation has been considerable in recent years – and looks set to continue well into the next decade.
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