The demand for purpose built student accommodation (known as PBSA) is growing, so much so that the number of student bed spaces due to be built for the 2019/20 academic year is 25% higher than last year totalling 29,000 beds. Why the demand? Student numbers are rising, 561,420 people applied to start a course in 2019, that’s nearly 2,500 more than last year. But, what does this mean for the British construction industry? Protection Supplies investigates the impact of the PBSA boom.

The Impact of PBSA on the UK’s Construction Sector

  • The construction output in higher education dominates all other construction markets.
  • Higher education development pipeline set to grow by 25.8% by 2021.
  • In just three months (from July to October 2018) the number of investment transactions in PBSA has more than doubled from £1.4bn to £3bn.
  • The PBSA sector is set to reach a total value of £53bn by the end of this year (2019).
  • PBSA accommodation provides 77% of the supply in the sector compared to University provided beds.

47% of Students Now Study Outside Their Home Region

There are now more students in Higher Education than ever before with 1.8m studying full time across Britain. In comparison, in the 1999/2000 academic year, there were just 670,000 students studying outside their home region. Today that figure stands at 1,100,000, with a whopping 23% of them moving from outside of the UK. The number of non UK applicants continues to grow, so much so that, EU students have risen by 63% and international students by 215% since 1999/00. As UK university degrees are acknowledged to be more prestigious and the value of Sterling weakens, there shows little sign of non UK applications falling. With the student population growing, it’s no surprise that bed spaces will increase by 25% for the 2019/2020 academic year, making it an ideal opportunity for both PBSA developers and construction companies.

Student Housing in the UK

With student housing rising, just how many properties in the UK are student houses? Protection Supplies examines the rate of student homes in major University cities.

  • Birmingham – One in every 51 homes is now a student property.
  • Reading – One in every 46 homes is now a student property.
  • Newcastle – One in every 15 homes is now a student property.
  • Exeter – One in every 15 homes is now a student property.
  • Liverpool – One in every 22 homes is now a student property.
  • Sunderland – One in every 96 homes is now a student property.

However, the uncertainty of Brexit still looms over Higher Education. Studying in the UK is remarkably cheaper compared to the US, it’s around 63% cheaper for Chinese, Malaysian, Indian and Singaporean students. So, it’s believed non EU students will still grow. The dawn of Brexit may even see UK students rise, due to a phenomenon called counter cyclical. Where there is an economic downturn, the public may look to increase their skills and look to Higher Education.

Graduate Retention: How Developers Can Meet The Demand

Purpose built student accommodation developers have also started to build hybrid co-living schemes so that this housing type can be targeted towards post graduates and young professionals. Students staying in their university town after graduation are already high, figures show that:

  • London has a 67% retention rate
  • Edinburgh has a 47% retention rate
  • Manchester has a 46% retention rate
  • Birmingham has a 41% retention rate
  • Cardiff has a 41% retention rate
  • Leeds has a 38% retention rate
  • Bristol has a 37% retention rate
  • Newcastle has a 37% retention rate
  • Plymouth has a 26% retention rate

% of students planning to remain in their university town after graduating.

With retention rates at an already high level, the breed of co-living schemes could see these rates boost even higher, as it becomes easier for students to remain in the city. Developers and town planners need to ensure there is enough accommodation for graduates, whether this is PBSA co-living schemes or purpose built rented accommodation.

In 2018, PBSA developers provided over 40,000 bed spaces, amounting to 627,000 bed spaces in total. There are currently 132,000 purpose built rented accommodation units in the pipeline.

What’s the Impact of PBSA on Landlords?

As PBSA continues to grow with new bed spaces increasing year on year should landlords be concerned? PBSA tends to be high spec, luxury, living conditions. These deluxe living spaces are likely to surge the standards of student property across the nation. This could mean private landlords will have to lower their rent or revamp their properties to compete with big PBSA. However, there’s still a market for private landlords. The average price of a new PBSA en-suite bed space has remained at 70% of the maximum Student Maintenance Loan over the last three years so it’s evident not every student can afford these prices.

Interested in student property? We have a number of opportunities in the UK for investors to purchase at the off plan stage with discount and incentives for those that get in early including guaranteed rental yields of up to 10% NET. Simply click here and register your details with us to be sent our latest stock.

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Daniel Peacock

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