Scotland’s strategic shift to meet growing demand for student accommodation

With eyes on developers to bridge the growing gap in student accommodation in Scotland, remarkable responses are emerging.

Chris McLeish, Partner within Morton Fraser MacRoberts’ commercial real estate team | PBSA News
Chris McLeish, Partner within Morton Fraser MacRoberts’ commercial real estate team.

When looking north of the English border, almost all purpose-built student accommodation (PBSA) in Scotland’s biggest city, Glasgow, was booked up for the 2023-24 academic year as early as February last year, signalling an urgent need for long-term solutions.

By Chris McLeish, Partner within Morton Fraser MacRoberts’ commercial real estate team

Long-term solutions might be starting to take shape and with all eyes on developers to bridge this growing gap in Scotland, we are beginning to see a remarkable response.

Continuing with the example of Glasgow, at the end of last year, Unite Students announced it has agreed to acquire an 800-bed student accommodation development in central Glasgow, catering to students arriving for the 2026/27 academic year. Moreover, in December, student accommodation provider, Alumno was granted planning permission for a new development in central Glasgow – a six-storey building set to accommodate 262 students.

Furthermore, there are several other significant schemes in Glasgow which are either awaiting determination or currently in consultation, including Watkin Jones Group’s 784-bedroom scheme at Charing Cross and MRP Land’s 492-bedroom scheme at Renfield Street. It was reported that, as of February 2024, there is a £200m funding pipeline of PBSA schemes in Glasgow that will deliver 1,200 student beds, which is extremely positive for the sector.

However, even when looking further north, a Scottish investor, Together, recently funded the acquisition of 850 beds for students across Aberdeen and Dundee by ATK Property Group, taking advantage of the PBSA supply and demand dynamic. Indeed, Dundee has recently seen numerous PBSA schemes obtain planning consent, including approval of an eight-storey student accommodation development on the site of the former Liquid/Mardi Gras Nightclub, providing 215 bedrooms for university students by 2026.

In the Scottish capital, a pipeline is also starting to grow. Last year, City of Edinburgh Council granted planning permission of Host Student Housing’s plan for a new 289-bedroom development. Moreover, it was reported that Hub and Bridges Fund Management were in the forward fund market for an investor to finance its 632-bedroom development, reportedly the largest PBSA scheme to be consented in Edinburgh. News of further investment is not slowing down – in recent weeks it was announced that Vita has obtained consent for a 267-bedroom development and Alumno for a 191-bedroom scheme at London Road following appeal.

These developments indicate a significant shift towards addressing the PBSA supply-demand imbalance across Scotland’s major cities. However, the question remains: is this response sufficient to meet the growing need?

A decade ago, PBSAs were seen as risky propositions for investors, but now, thanks to their growing demand, they are seen as mainstream assets, offering attractive rewards.

While this has encouraged a surge in development projects, which is a positive sign, the scale and speed of these initiatives may still fall short of the increasing demand as, on average, completed products will not be seen until at least 2026.

Furthermore, the focus on large cities might overlook the accommodation needs in smaller towns and rural areas with educational institutions. The strategy should ideally be inclusive, ensuring that students across Scotland have access to quality and affordable housing, but student demand, funder appetite and rental levels on offer will inevitably dictate developer interest.

With the student population in Scotland continuing to grow, driven by both domestic and international enrolments, an urgent response has been required from developers to invest in unwanted space and to offer housing for students.

In Scotland, we are seeing developers not only respond to the demand but investing heavily in the future of student accommodation too. The current wave of developments looks like the beginnings of a broader, more strategic response to the student housing crisis in Scotland.