With the number of students rising across the UK, demand is outstripping supply in purpose-built student accommodation (PBSA), opening up opportunities for investors and landlords.
JLL’s Student Housing Report forecasts 2020 to be a strong year for purpose-built student accommodation in the UK. The report states: “The outlook for PBSA demand is encouraging, thanks to a combination of supportive demographic trends, strong international demand and growing pressure on housing.”
The report forecasts there will be a further 500,000 full-time university students in the UK by 2030. Full-time international students and first-year students are the core market for PBSA. However, demand is increasing from second- and third-year students as well. In the UK, there are 650,500 PBSA beds. And for the first time, private owners make up more than 50% of all PBSA supply.
Students driving rental demand
Across the UK, students are driving demand in the rental market. Since 2012/13, full-time student numbers have increased by 7% to 1.84m. This makes up 79% of all students and is equivalent to 32,500 additional students per year, establishing the central demand for PBSA.
Nationally, there has been a rise of 1.4 full-time students for each new PBSA bed, showing demand is outstripping supply. This ratio is much higher in the north-west of England, Midlands and London, revealing the increasing need for additional student housing in these areas and opening up opportunities for investors and landlords.
Lucrative investment opportunities
Investing in university towns and cities can bring lucrative yields as student housing continues to provide great investment opportunities. JLL estimates that investors plan to invest an additional £8.8bn into living sectors during the next two years, and 31% of this is aimed to be housing for students.
Property investment opportunities have shown to be strongest around university cities in the UK, mainly due to high rental demand and large numbers of young professionals and graduates in these areas.
Research from the summer of 2019 revealed the most lucrative opportunities are located in university towns and cities in the north of England and Midlands. These regions have become a key target for property investors and will likely be especially popular for those investing in PBSA during 2020.