According to data from UCAS, the 2022 – 2023 academic year has seen more than 560,000 new undergraduate students placed into programmes of study. Property firm Knight Frank have taken this data, alongside population projections from the ONS and concluded that there will be a 16% increase in full time undergraduates between now and 2030. This is the equivalent of over a quarter of a million more domestic students looking to enrol.
This is all happening against a backdrop of falling starts of new PBSA (purpose built student accommodation) in the UK. The number of new PBSA beds was around 30,000 a year between 2018 and 2020, this has dropped steadily to just 14,000 last year underlying the problem. The issue is exacerbated by the fact that many of the existing PBSA student buildings need to be refurbished. In fact, Unipol the student housing specialist estimate that some 10,000 student beds were removed from the sector in 2022 – 2023.
Construction costs are now far higher than they have been at any point in the last decade and the rising cost of borrowing looks unlikely to drop considerably in the near term. Planning applications for student projects have also dropped by a massive 70% since 2015. Knight Franks Kate O’Neill states “Escalating and uncertain build costs, wider inflationary concerns, skills and labour shortages, financing costs and planning policy all represent notable headwinds limiting future supply”.
Over the last couple of months the media have written extensively about the shortage. The guardian have highlighted how they believe the student housing shortage is the worst since the 1970’s and additionally that many students are having to find beds in neighbouring cities. There are currently 3 students for every bed available and this is getting worse rather than better. The Financial Times write than the student accommodation sector is what private equity dreams are made of with increasing demand and falling supply.
If you would like to find out how you can invest successfully into purpose built student accommodation please contact our expert team today.
