Higher Education and Student Accommodation Construction Sector Report - UK 2012-2016 AnalysisAMA Research
April 16, 2012
74 Pages - SKU: AJLA3903957
Additional InformationThe UK’s student accommodation market has emerged as a key investment sector over the past decade, attracting growing interest from investors, developers and private operators. To date, over 170,000 student bed spaces have been provided by commercial operators in the UK.
The continued expansion in the number of students in higher education has led to increased pressure on university residential accommodation. Decent accommodation is a key part in universities’ marketing strategy to attract new students, but only around 21% of students are currently catered for in university run halls. With overseas student numbers alone forecast to rise to 870,000 by 2020 there are concerns that the shortfall in university owned accommodation will continue to grow, requiring universities to address past under investment and develop additional student residences to cope with the growing numbers in communal accommodation.
It is estimated that there are around 497,000 student bed-spaces in residences across the UK, of which 326,000 are provided by the higher education sector directly and the remaining 171,000 bed-spaces by private providers. The total value of the UK student accommodation sector is estimated to be around £20.5bn, of which University owned student accommodation is worth around £14bn and purpose built privately-owned (PBSA) student accommodation is worth around £6.5bn.
In terms of regional concentration, the provision of PBSA varies widely across the UK, with acute under-supply, especially in historic cities where planning controls are generally restrictive with regards to any new building developments and where the availability of suitable ‘brown-field ‘sites is generally limited.
The student accommodation sector has proved one of the most resilient during the economic downturn, despite the continued difficulty in obtaining private finance; however, changes to higher education funding will mean most HEIs will need to review the ownership and maintenance requirements of their student halls, including campus-based universities. With limited financial resources at their disposal, many universities are now considering various outsourcing options for their student residences including selling their accommodation into the private sector and renting it back on a long-term lease.
Universities are also increasingly outsourcing accommodation management functions to the private sector to save money and focus resources more closely on the core functions of teaching and research. Working in long-term partnerships with universities, private providers such as UPP can provide a range of services, including the development of new student accommodation and academic facilities, specialist asset management services and the refurbishment of existing premises. These services have enabled private sector funding to address a backlog maintenance requirement of approximately £3bn which exists across the existing higher education estate.
Given the current financial climate, it is difficult to predict the annual number of new bed-spaces expected over the next few years. Whilst there has been some increase in development activity in 2011, predominantly in London, it is doubtful that net new supply will increase at the rate seen in previous years.
Although market growth has slowed, it continues to be characterized by strong and growing demand and a lack of supply of good quality, well located and managed accommodation. We are therefore forecasting a steady increase in the number of new bed-spaces developed over the next few years to reach a total of around 250,000 PBSA beds by 2016 (170,675 in 2011-12).
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