The desperate need for student accommodation in the UK

The Purpose-Built Student Accommodation sector is experiencing incredibly high growth, with more and more developers getting involved in this lucrative investment. However, demand is continuing to be far higher than the provisions available. There is a genuine need for PBSA with UK universities continually expanding and developing.

The PBSA sector is structurally undersupplied and has been for many years. In London, student numbers are growing 15 times the supply of property available to them. Universities just don’t have the volume of accommodation needed. The University of Plymouth had 23,155 new students in 2015/16, however, there were only 2,800 university provided rooms available. Moreover, this isn’t an exceptional circumstance, universities across the UK are struggling to provide beds for students. City centre universities with large campuses often don’t have the resources to build accommodation near to the sites. The average national student to bed ratio is 2.3 students per bed space available in PBSA, so despite the considerable investment in the sector, demand is still outstripping supply.

The demand for student housing has always been high. The higher education sector in the UK is one of the best in the world, with record levels of investment in student facilities. With the introduction of higher fees, students are expecting a higher quality student experience and are willing to pay more for accommodation that suits them. Student rents are higher than ever, with impressive yields for investors.

One of the main factors in the increasing demand for PBSA is the increased number of overseas students choosing to study in the UK. International students who don’t have the option of living with family are far more likely to look for PBSA in their second and third years of university. In 2016/17 nearly half a million non-UK students were choosing to study here. These students often look for high-quality purpose-built student accommodation, often staying in the UK over the summer months when university provided housing is not offered. Many international students are choosing studio accommodation for privacy and a base to stay while they discover the country. Developers like RW Invest have a wide range of PBSA options and investing in student property is perfect for investors who are looking for high returns.

Purpose Built Student Accommodation is a long shot from the crowded halls and shared bathrooms of the past. Many new PBSA developments feature luxury studios, concierge services, gym facilities and cinema rooms. These are often a far more desirable choice than university provided accommodation which is usually in need of serious renovation. PBSA also allows students more choice in their accommodation. Instead of catered halls or shared bathrooms, they can enjoy high-end kitchens and their own en-suite. In 2017, 30,000 new student bed spaces were created, with private accommodation dominating figures. Investors recognise the opportunities that student accommodation provides. In cities with multiple universities, like Liverpool, Manchester and London, there are always new students looking for a place to stay.

The average annual return on PBSA over the last five years has been a massive 11.8 per cent compared to 7.8 per cent on the standard residential property. Investment in PBSA is also continuing to rise, with a 17 per cent year on year increase. Student apartments are a solid choice for investors, with certain demand and an abundance of tenants.