What’s Behind The Rise In Private Student Accommodation Developments? – Elite

Over the last decade, we have seen a sudden rise in the number of private student accommodation developments around the country.

Particularly in cities and densely populated student towns, there has been an increase in the number of private developments aimed at those studying away from home.

It may seem strange that developers have invested in student accommodation as UCAS figures show university applications are decreasing by as much as 14% a year.

On the contrary, despite falling student numbers, there is a strong business case to be made for investing in private student accommodation developments.

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The Student Accommodation Market

  • In the last five years, there has been a number of development companies and private investors entering into the student market.
  • In 2016, the UK saw investments totalling more than £3.1bn poured into the purpose built student housing market.
  • This is more than double the amount invested in 2013 and 2014.

This huge injection of funds into the market has seen it grow substantially over the last 12 months.

  • This growth is forecast to increase further by the end of the 2017 financial year, with predictions forecasting an estimated £5.3bn.

This huge increase in investment shows that developers are keen to get a foothold in this sector, but what do they see in the market and why the sudden interest?

The Demand

The basics of any business or investment revolve around a basic system of supply and demand.

This would suggest that the increased investment into the student accommodation market is a result of an increase in demand.

This isn’t due to more students going to university, as recent figures have shown,

  • The number of higher education applications by students has decreased.

So why have investors still put so much money into developing student accommodation? [Read More At This Article]

It seems that the slight decrease in student numbers is being chalked up as just a bump in the road.

  • Overall figures from the last five years show that the number of students is still holding strong and will continue to grow steadily.
  • Despite Brexit fears and a lull in current applications, long term growth forecast looks promising.
  • Much investment is originating overseas, with property consultancy Knight Frank saying around 70% of monies is from overseas buyers and high net worth individuals.

Market Safety

The UK has become a service-based economy which means it relies on an educated workforce.

Not only that,

  • The UK’s higher education sector is one of the country’s biggest exports, with millions of international students coming to study every year.

This means that there is a degree of necessity within the market and, aside from occasional fluctuations, there will always be a need for student accommodation.

Potential investors can look at this as an opportunity to set up a development project in a safe and future-proof market.

Also, you can check out this blog on Dry Riser Safety in Student Accommodation 

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The Price

There’s a lot to be said about the price of student accommodation in the UK and how that has affected the decision by many developers to invest in the market.

There has been a lot of media coverage regarding the ever-rising price of student accommodation, particularly university-owned accommodation.

  • By 2013, prices were getting so high that students throughout the country were unable to meet the costs and were forced to seek alternatives such as private accommodation in much higher numbers than had previously been the case. 
  • This exodus left a gap in the market that many developers sought to fill.
  • The rising price of university housing, much of which was aged and in need of refurbishment, created an opportunity for investors to develop modern, affordable housing solutions in the private sector.
  • Check out this Article on the Most Affordable Cities For Student Accommodation

As a result, a number of new projects all over the country have sprung up.

These developments have improved the quality of living standards for students while simultaneously undercutting existing competitors and increasing their market share.

The Subsidies

The need for affordable student housing has become a major issue throughout the education sector, with the wider general public and the government also voicing concern. Learn more about funding and finance for Students.

  • In recent years, government and local councils have given out a number of grants and loans to developers with plans to build affordable and effective student accommodation.
  • This is another key reason for the increased number of student apartment buildings and flats popping up around the country.  
  • The opportunities for development have increased substantially thanks to subsidised investment from government bodies and private developers.

This means that companies across the UK can now take advantage of the growing student accommodation market.

It also means that the overall costs for developers have gone down, leading to increased interest from developers, both domestic and international.

Are you planning a student accommodation development? Then get started on the right path with our internal mechanical and electrical design team, you can also see how to best future proof your development in this blog article.

Set up you no obligation appointment today.

For further information on commercial mechanical and electrical systems or to take advantage of our free 30-minute specification consultation please contact the Elite team on 0114 269 3162 or email office@elitemechanicalservices.co.uk

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