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News Release

Student housing market: ageing accommodation and sustained student demand creating investor opportunities

Concerns over scale of potential pipeline fail to acknowledge development cost pressures and the need to modernise a large proportion of campus estates and first generation private schemes.

​7th December 2016 - Ageing university accommodation and increasing demand for places will mean continued opportunity in student housing investment market according to research from JLL.

JLL estimates that the current pipeline under construction equates to just 6% of total purpose built beds. Based on their latest estimates for 2015/16 student numbers, these units will add just 2 percentage points to the current Purpose Built Student Accommodation market share figure of 34% of full time students.

75% of university owned accommodation is older than 2000 and JLL predicts that this will mean increased use of partnerships with student housing providers as it becomes unviable for universities to redevelop and operate some of the older building stock.

JLL also predict that there may be increased competition for student housing development sites as their reliance on central urban locations means they come under increased competition from offices, retail, hotels and variety of residential uses, such as open market housing, retirement living and the fast expanding Private Rented Sector. This is driving the trend for first generation portfolio sales such as Victoria Halls as many investors feel that the best way to increase potential returns is to improve many existing private schemes in prime locations.

For the 2016/17 academic year almost 522,000 students were enrolled, an increase of over 7,000 on 2015. The number of EU acceptances rose by 8% year-on-year, with no immediate sign of the UK’s vote to leave the EU hitting recruitment. Unsatisfied demand for UK university places exceeded 150,000 for the fifth successive year, highlighting the scale of demand in the sector.

Philip Hillman, Chairman of JLL’s Alternatives team, commented: “Amongst international students, the UK scores highest for the quality of education, living, university support and overall satisfaction. With undersupply in some university towns and cities resulting in rental growth of up to 10% for the 2016/17 academic year, the total returns provided by the sector continue to be attractive, further compounded for overseas investors by the recent depreciation in the pound.”