Deloitte Real Estate publishes Student Housing 2013 – The evolving market
A rise in the number - and cost - of student bedspaces
28 November 2013
- There are now 457,000 purpose-built student bedspaces in the UK;
- The average weekly rent in London has risen by 50 per cent over the past five years; and
- The current average weekly rent is £177 in London, and £114 outside the capital.
A report by Deloitte Real Estate into the UK’s student housing market highlights the pace of growth in purpose-built accommodation.
There are currently 457,000 purpose-built bedspaces in the UK, up 30,000 in just four years. However, with 1.72 million fulltime students now studying in the UK, the demand for student accommodation has never been greater.
While there has been a significant increase in student accommodation in recent years, the level of provision continues to vary from region to region. Deloitte Real Estate’s unique ‘bedspaces ratio’ measures the number of fulltime students to each purpose-built bedspaces - an indication of the capacity for new supply. For example, in London there are 294,555 students for 66,787 purpose-built bedspace, equating to a ratio of 4.4. Northern Ireland has the highest ratio at 5.8 and the South East and East Midlands the lowest at 3.0.
Chris Baldwin, partner and head of student housing at Deloitte Real Estate, said:
“The introduction of higher fees has meant that students have become even more discerning in their choice of university, and universities recognise that their built environment can play an important role in attracting students. We therefore expect to see universities further improve their accommodation, or continue to outsource some of it to the private sector.”
Using Deloitte’s database of every purpose-built student accommodation scheme in the UK, the report charts the growth in weekly rental levels, which have been rising for the past five years despite the impact of factors such as higher student fees. In London, the average weekly rent has risen by 50 per cent, while the average for the UK outside London is up by 25 per cent. However, while the database shows that rental growth has been seen across the vast majority of schemes over this period, there remain wide variations in rents. This depends on the building quality whether the accommodation is operated by the university or privately, and location. The UK average weekly rent (excluding London) is £114 per week, compared to £177 in London.
But can the sustained rental growth of the past five years be continued? Deloitte Real Estate’s report found that fundamentally, there are a number of factors to support further rental growth at a national level, although the pace is likely to continue to differ by location. Firstly, many regions are still relatively undersupplied, with comparatively few purpose-built bedspaces per fulltime student. Secondly, while traditional residential accommodation may be seen as a cheaper alternative, house price growth is starting to be seen in many parts of the country, meaning that this type of accommodation will not be immune to rising rents either.
Baldwin continued: “Ultimately, while there are geographical nuances that must be recognised, our research shows that in overall terms, the student housing market remains undersupplied. Accommodation is a recognised part of the ‘student experience’ that is so important for attracting fee-paying students. Consequently, we expect the sector to see further rental growth over the coming years and continue to be of interest to investors and developers alike.”
The Deloitte Real Estate student housing database is updated annually and now in its sixth year. It contains details of every purpose-built student housing facility in the country. Current data details 457,000 bedspaces, across 860 individual buildings in over 100 locations. The database covers a wide range of scheme specifics, including the breakdown of bedspaces by type and number, rental levels, contract lengths, and method of operation.
Notes to editors
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