"This trend is no doubt a reaction to both the local and national press, with recent stories highlighting the challenges students have faced in finding suitable accommodation"
- Richard Ward - StuRents
Richard Ward, Head of Research at StuRents, said: “Supply and demand fundamentals at a national level remain extremely bullish for operators. These dynamics are driving unprecedented rental growth. All the early indicators suggest further substantial hikes for 2024- 25. In the short term, this is great news for existing owners as OPEX remains comparatively high and this growth will be welcomed.”
Planning activity in the UK remains at relatively low levels
In the first 8 months of 2023, applications totalling 27,000 beds have been put forward, but only 13,000 of them got approval. In contrast, during the same period in 2018, 37,000 units were proposed, and 33,000 were approved.
This means that there's been a decrease in the number of new projects, with only 12,000 beds expected for the 2023-24 academic year. While planning has slowed down nationally, some places such as Leeds, for example, remain active due to attractive conditions, while others like Coventry have seen a reduction in planning activity.
With construction costs still high and the cost of debt elevated compared to recent levels, developers have been focusing on providing studios to make schemes viable. Furthermore, most of the developments outside of London are focused in key cities, with Bristol, Leeds, and Nottingham all having significant pipelines.
Students from South Asia have higher budgets than other demographics
The report delves into differences in demand from various demographic groups, showing the effect on prices. For example, the properties being viewed by students from South Asia are typically more expensive than those being viewed by their UK or Indian counterparts.
This price demand is affecting the situation in particular locations. For example, in Bristol, a city with well-reported accommodation shortages, the price points being viewed by house-hunting students increased dramatically in 2023-24. The average listing view made by a student originating from South Asia for PBSA increased from £247.88 to £294.60 per week, representing a growth of 18.8% year-on-year.
Students are enquiring about rooms earlier in the lettings cycle
The 2024-25 season has already started in some cities - the earliest StuRents has ever seen students house hunting. Across all student accommodation types for the 2023-24 season, almost 45% of enquiries for the year were made by April. This represents a substantial jump compared to the previous year when the majority of enquiries for PBSA were made from July onwards.
Richard concludes: “This trend is no doubt a reaction to both the local and national press, with recent stories highlighting the challenges students have faced in finding suitable accommodation. For operators, this can result in further operational challenges if prospective tenants decide they want to drop out of their previously signed tenancy agreement before it starts.”