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Student accommodation

Deloitte: Student housing supply not meeting demand

Author: Gemma





Despite the rapidly increasing growth in purpose-built student housing, there are still not enough properties to meet to demands of the UK’s student population.

That’s according a recent report from Deloitte, which revealed there are now 457,000 purpose built student bedspaces in the UK – an increase of 30,000 on four years ago.

However, with 1.72 million full-time students currently at UK institutions, there is simply not enough space to provide a bed for all that need one.

The number of students heading to UK universities in the coming years is also set to rise, with a limit no longer in place for the number of international students that can attend courses in the country. Furthermore, the initial impact of course fee rises is starting to settle down as more UK students decide to head into higher education.

Deloitte states that the demand for student housing has “never been higher”, suggesting a lucrative investment market for people looking to make their money go further.

As revealed by Deloitte Real Estate’s unique ‘bedspace ratio’ there are only 66,787 bedspaces in London for the 294,555 students in the capital, giving a ratio of 4.4. East Midlands and the South East has the lowest ratio, standing at 3.0.

While the development of student accommodation is important, there is also a need to offer quality bedrooms to meet the needs of young people.

As stated by partner and head of student housing at Deloitte Real Estate Chris Baldwin, the higher course fees have made students more picky about the establishment they go to. The state of local student property is one of the main factors that can attract people to particular institutions.

“We therefore expect to see universities further improve their accommodation, or continue to outsource some of it to the private sector,” he added.

Deloitte also revealed the average rental incomes of properties at universities throughout the UK. In the past five years, the weekly rental cost has been growing, despite the impact of higher student fees.

According the property experts, London has seen weekly costs rise by as much as 50 per cent during that time period. For the rest of the UK, the increase in cost stands at around 25 per cent.

In the UK capital, the average weekly rent costs around £177, while in other areas the mean cost is £144 for seven days. However, Deloitte noted that this depends on location, quality and if the accommodation is under ownership of the university or a private investor.

Deloitte stated that it expects that rental growth will continue at a national level, providing excellent opportunities for investment – although rates of increased rental values will depend on the region.

The experts suggest that supply is still low in many regions and that the increase in housing prices for traditional residential accommodation will have a marked impact on rental rates, pushing more students towards purpose built properties.

“Accommodation is a recognised part of the ‘student experience’ that is so important for attracting fee-paying students.
Consequently, we expect the sector to see further rental growth over the coming years and continue to be of interest to investors and developers alike,” Mr Baldwin concluded.

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