- £1.4bn of student accommodation stock was transacted between January and July
- 2018 volumes are forecast to reach £4bn
- Overall acceptances for places at university for 2018/9 fell by just 1% despite demographic dip
The UK student accommodation market continues to perform well with £1.4bn worth of stock transacted in the first seven months of 2018, despite a dip in overall acceptances for places at university for 2018/19, according to Cushman & Wakefield. On average, there are currently two students for every purpose-built student bed.
Cushman & Wakefield’s mid-year UK Student Accommodation briefing revealed that a further £1.3bn of stock is currently under offer, with early estimates indicating that approximately £4bn will be transacted by the end of the year. In addition, there are approximately 11,000 bed spaces being marketed to investors totalling £725m. Portfolios represent 52% of transactions between January and July.
Russell Hefferan, Associate in Cushman & Wakefield’s Student Residential Investment team said: “After a relatively slow start to the year, transactions are now accelerating with around £1.30bn currently under offer. There is an increased level of demand for affordable, built out schemes, with asset management angles that are not necessarily in Russell Group locations. We are also seeing an increased appetite for forward fund opportunities in prime regional cities where there are strong supply and demand dynamics.”
According to UCAS, overall acceptances for places at university were down by 1.1% for 2018/19, with UK acceptances down by 1.9%, despite a near 3% fall in the number of UK 18-year olds. However, EU students placed has grown by 3%, with non-EU international students growing by 4%. UCAS data also shows that there are now clear divisions in the market, with acceptances to higher tariff universities growing by 1%, whilst those accepted to lower tariff institutions falling by 3% largely mirroring last year.
David Feeney, Associate in Student Accommodation Advisory at Cushman & Wakefield said: "Overall demand for accommodation remains strong, with an increasing number of students demanding a purpose-built bed space. A similar number of bed spaces will be delivered for 2018/19 entry as was the case in 2017, with the average price of a new en-suite bed at £148 p/w broadly in line with that observed last year.
“However, there are now clear divisions in the market – not only in terms of students’ choice of university, but in the success of stock in towns and cities across the UK. Whilst some locations are seeing significant rental increases, in others some rents are falling due to competition, product choice and market digestion issues.”