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News Release

Increasing University commerciality will drive further student housing partnerships, says JLL

25th November 2016 - A study by JLL’s Higher Education team has charted the rise of student housing partnerships between Universities and private sector operators in the UK.

This study is the first to pull together comprehensive information on this specialist area of the student housing market. It highlights the c. 27,000 new beds that these partnerships have created in the last 15 years, and the further c. 16,500 beds transferred from university portfolios. So far these partnerships have attracted £2.4 billion in capital investment and the number of partners has tripled in the last decade.

JLL predicts a particular increase in the number of Design, Build, Finance and Operate (DBFO) schemes over the next five years. In these, a student housing partner takes a long lease of university-owned land, designs a scheme in conjunction with the university, raises finance, builds it, operates it, and takes the risk of finding occupants. In return, the University receives a capital receipt, the expertise of a dedicated partner, and continued influence over creating a high-quality student experience.

This rise will be fuelled by lease accounting changes which will bring many older student housing deals back on to university balance sheets. JLL also expects universities who have not embarked upon this type of partnership before to look seriously at DBFO as an option.

The study also points out that affordability will be a major theme for all aspects of student accommodation over the next five years. This has become a priority concern for universities given the financial pressures on students, combined with high build costs and a lack of product which is driving up rents.

Robert Kingham, Director in JLL’s Higher Education team, commented: “As a market, the sector is maturing, evolving, and becoming more sophisticated. The scale of the challenge is huge. Universities own or lease a quarter of a million beds in the UK and we estimate that upwards of £5 billion is required to address their quality, in addition to creating more beds, to improve the student experience.”

Paddy Jackman, Director in JLL’s Higher Education team, said: “In recent years Universities have become a lot more commercially focused on their estate. Finance and Estates Directors are coming to the Higher Education sector with strong corporate experience and extensive knowledge of innovative solutions such as DBFO schemes..”

Martin Le Grice, Head of Alternative Investment at JLL, added: “There is increased funder interest in the sector. This is partly driven by the opportunities in the DBFO and the emerging Strip Income markets, and the relative stability that Purpose Built Student Accommodation (PBSA) offers. When set against the difficultly in deploying equity, it demonstrates why funders are increasingly keen to enter what is currently a relatively closed market.”

The full report can be downloaded here: