Shifting demographics and investment updates

New research by Cushman & Wakefield provide an investment market update and reveal a shift in demographics.

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Cushman & Wakefield report that the future is bright for PBSA as the UK’s position as an academic powerhouse is set to outlive any pandemic uncertainties. Overall applications for UCAS’ January deadline saw an increase of 8.5% – which is higher than that seen during the Global Financial Crisis.

New research by the company reveals that the increase in university applications is currently driven by non-EU students – with a 14.7% increase in application levels in a single year. However, UCAS predict that by 2025, there will be an additional 90,000 18-year-old domestic applicants.

With the regional breakdown of student beds to be delivered, Coventry led the way with over 3,700 beds – which is 16% of the total market. London, Leeds and Exeter follow. Leeds has the most nominated beds of any regional market – currently standing at 7,051 beds.

With average rents, London is the most expensive at £238 per week. Rents range from £124 per week in Sheffield to £174 in Bristol. In Scotland, the average rent per week is £125 in Aberdeen, £141 in Glasgow and £167 in Edinburgh. In Cardiff, it’s £131 per week.

The top ten operators control 59% of the student private market – and include Unite Group, Blackstone, Brookfield, Arlington Investors, Empiric Student Property, GSA, Mapletree Investments, Singapore Press Holdings, Downing Students and Greystar Europe Holdings. Unite is the market leader with 41% of all nominated student beds in the UK.

“Student numbers show no sign of slowing down with HESA data showing just over two million full-time students studying in the UK at the current time. Students studying at post-graduate level have been a key driver of this growth, with this cohort increasing at an average of 5.1% per annum since 2016/17.

“Although it might be expected that the Covid-19 pandemic would deter international applications, the UK’s global reputation for academic excellence is helping to shore up the number of applications from non-EU undergraduate students. UCAS’ data again showed an increase in the number of accepted applicants from non-EU undergraduate students for the 2020/21 academic year.”

David Feeney, UK Student Accommodation Advisory Lead, Cushman & Wakefield

Investment market update

The UK PBSA sector is worth around £60bn and has maintained its reputation as the go-to alternative asset of choice for investors. The new research shows that mid-term attractiveness is driven by the ‘return to normal’ and the UK’s continued reputation as a global powerhouse.

Across the UK in 2020, London experienced the highest investment volumes. Other hotspots include Bristol, Birmingham and Leeds. Yields in the PBSA sector have remained broadly stable across the 2020 year in prime London and in super prime and prime regional locations. 

“The growth of the PBSA sector has been significant over the past decade with investors drawn to the attractive counter-cyclical nature of the sector alongside a broader increase in allocation to alternative investments. Furthermore, investment yields have remained resilient despite a backdrop of political and economic uncertainty caused in part by Brexit and Covid-19.”

Andrew Smith, Head of UK Student Accommodation, Cushman & Wakefield