Student Accommodation Sector Soars

The student accommodation sector is set to go from strength-to-strength in 2019. With several universities facing financial difficulties, universities are placing more emphasis than ever on getting student accommodation right.

An ever-increasing number of universities are struggling with the demand to match that of students. Often, universities only allow first year students to stay in halls of residents – only fractionally over one third of total students.

The sector itself is expected to reach £53bn in 2019, with nearly 30,000 additional rooms being produced next year. This in itself relives pressure on the shortage of suitable housing in the UK with more purpose-built accommodation facilitating to students as opposed to private rentals.

Statistics from UCAS highlight the continued increase in students attending university. Although we have seen a decrease in UK applications for 2018/19 by 2%, proportionately, we have seen an overall increase by 0.3% – this at a time where many are supposedly put off by the astronomical fees.

Rather contrastingly from the housing market as a whole, the economy has very little bearing, if any, on applicants to university. Surprisingly, a poor economy often boosts the number of applicants in an ever-increasing competitive field.

The biggest investors in UK student accommodation came from Singapore. Major deals include the Singapore Press Holding’s acquisition of Unites Mayflower portfolio for £180m.

Asian and North American investors continue to dominate the student accommodation space in the UK. UK investors continue to have an impact though, with Arlington Advisors double acquisition of the Merlin Heights in Leicester and the £232m Stellar Portfolio.

For those looking to invest in student accommodation – the signs are good. The net value for student property is up 7.2% across 2018, with this figure unlikely to change over the next 12 months. This is largely due to an increase in rental returns across the market.