The number of bed spaces set to be built for the 2019/20 academic year has risen by 25 per cent from the year before, according to recent analysis from Knight Frank from the UK student housing development update.
This increase in the development pipeline that includes some 29,000 purpose-built student bedrooms to be completed across the UK by the start of the 2019/20 academic year highlights the resilience of the sector despite wider uncertainties, according to the Knight Frank.
Rising from 23,000 newly built bedrooms across more than 60 university towns and cities in preparation of the 2018/2019 academic year; this is a rise of 25 per cent.
The total number of purpose-built student bed spaces is set to reach 600,000 when the new additions are completed, which is an increase of 5.1 per cent. A further 14,000 bedrooms are also under construction or in planning and are due to be delivered during the 2020 and 2021 academic years, according to Knight Frank.
The majority of purpose-built student accommodation (PBSA) rooms are operated by universities, which accounts for 64 per cent of the current stock. However, 38 per cent of these is actually privately owned and leased back to universities.
Private developers will build 82 per cent of the total beds due to be completed by 2021, and nearly 90 per cent of the beds due to be built for the 2019/20 academic year. Also, an opportunity for further collaboration and investment into the sector from private developers may come as universities seek to improve or replace older accommodation stock, according to Knight Frank.
This all fits in with the growing role that the private sector is playing in providing new accommodation for students according the recent data from Knight Frank.
There is a move away from studios towards en suite rooms arranged in cluster flats, which traditionally command lower rents, according to the recent analysis of student accommodation schemes which are currently under construction.
Currently, 68 per cent of the units under construction are categorised as cluster flats with shared kitchens and lounge areas while the remaining 32 per cent are studios. This represents a shift in development trends, as the market reacts to affordability pressures and changing student demands in some key cities, according to recent data from Knight Frank.
Value for money appeared as the key driver in the accommodation choices of students in a recent survey of 70,000 students undertaken by Knight Frank and UCAS. This survey highlighted the importance of location, quality and the option to live in friendship groups as important factors for student happiness in PBSA.
Rising development costs are likely to result in raised prices, yet the development trend is set to continue and well-located assets in strong markets will prosper and achieve high occupancy rates, according to Knight Frank.
James Pullan, global head of Student Property commented: “With a significantly larger pipeline this year, confidence in UK PBSA remains undiminished. Affordability will remain a key focus for owners, operators and students and our analysis shows a shift in development towards shared
accommodation in response.
He also said that schemes which are providing clear and obvious elements that add value will gather the most demand.
Christian Davis, vice president acquisitions, Europe at CA Ventures commented: “Knight Frank’s analysis demonstrates a healthy pipeline of new purpose-built student accommodation over the next three years. Furthermore, as is noted in the report, the onus is increasingly falling on the private sector to deliver new stock.”
He also said that while changing demographics and fluctuating student numbers due to Brexit could pose short-term challenges, the longer term view of PBSA in the UK is positive.