Student accommodation in the UK remains positive – and the future outlook reveals optimism in spite of Brexit concerns.

Summary:

• The value of the UK PBSA sector continues to grow with an estimated value of £53 billion by 2019
• 2018 was a strong year for the UK’s PBSA sector, with the cumulative value of investment totalling £4.5 billion
• A rise in applications for the 2019-2020 academic year contradicts challenges faced by Brexit and increases demand for PBSA

A new report from Knight Frank has found that demand for purpose-built student accommodation (PBSA) across the UK is forecasted to continue growing, due to a high increase in the number of applications for the next academic year.

The UK’s stable and strong higher education sector remains a key driver for driving demand in the PBSA sector, as there are 18 UK universities amongst the world’s top 100 and 4 in the top 10, with more UK institutions ranking higher, when compared to 2018.

Since the 2016 EU referendum, UK universities have been moving up the ladder on the QS World University Rankings, and the value of the UK PBSA sector continues to grow with an estimated value of £53 billion by 2019, defying the overriding view of uncertainties caused by Brexit and its affect on the UK’s higher education sector.

2018 was another strong year for the UK’s PBSA sector, with the cumulative value of investment totalling £4.5 billion, almost £500 million higher than the previous year and about £1.5 billion higher from 2016, as reported by Knight Frank.

Moreover, applications from local and international students also increased by about 2,500 from the previous year, as more than 560,000 students applied to undertake a full-time undergraduate degree at UK universities for the 2019-2020 academic year.

Almost 20% of all applicants came from outside the UK, with an overall increase of 5.7% from the previous year, highlighting the attractiveness of studying and living in the UK. This record number of international students mainly came from China as the number of Chinese student applications rose from 11,915 to 15,880, totalling a 33.3% rise from the previous year. This followed a 20.6% increase from the previous year. This brings Chinese applicant numbers to nearly the same level of those from Wales and Northern Ireland, which were recorded at 18,855 and 17,910 respectively.

This strong performance in student property investment’s outlook is set to continue in 2019 and in the years to come increasing student property prices. Moreover, the shortage of student properties in the market due rapidly rising student numbers, is also playing a role in driving investor returns. Overall, data suggests that the rise in applications for the 2019-2020 academic year contradicts challenges faced by Brexit and increases demand for PBSA.

James Pullan, Global Head of Student Property at Knight Frank says that: ”While the latest figures suggest that Brexit has not deterred overseas applicants, future demand is contingent on decisions surrounding the UK’s relationship with the European Union. The medium and long term picture however, remains bright, underpinned by positive demographics and the recently announced International Education Strategy.”