Glasgow Tops Charts in Student Accommodation Rental Surge

The latest UK Student Accommodation Report by Cushman & Wakefield reveals that the period from 2022/23 to 2023/24 has marked the strongest year for rental growth in the UK student accommodation sector, notable in Glasgow. The Glasgow student accommodation rental rates experienced a substantial 19.4% annual growth, leading other cities such as Edinburgh with an 11.2% growth and Aberdeen with an 8.4% increase. 

As per the student housing news, Glasgow has seen a surge of 22,155 full-time students, second only to London in growth over the past decade. Edinburgh closely follows with an additional 16,645 students in the same period. In the last three years alone, Glasgow’s student population has grown by 12,220, reinforcing its position as a key player in Glasgow student accommodation demand.

Cushman & Wakefield, a Commercial Real Estate Agency, notes a significant demand-supply imbalance in the UK student accommodation sector, anticipating a marginal slowdown in demand growth in the coming years. Potential factors contributing to this include fluctuations in entry rates, changes in government policies, and varying demand profiles across towns and cities.

The report highlights concerns about the supply forecast, indicating that only 12,195 new beds are expected to open in 2023/24. This marks the lowest annual figure for Purpose-Built Student Accommodation (PBSA) delivery in a decade. Major markets like Glasgow, Manchester, and Bristol have seen no new beds opening, while London has only added over 330 beds. Notably, Nottingham, Edinburgh, Leeds, and Colchester account for nearly half of all new supply. 

The student housing news also highlights the occupancy rates for August 2023, wherein Glasgow and Edinburgh are 79% and 78%, respectively, outpacing other UK locations, with Bristol at 83%. The report acknowledges an increase in the quality of UK student accommodation. Still, it raises concerns about affordability, attributing rental growth to rising operational and development costs, high inflation, and a decline in new bed delivery.

Murray Strange, Managing Partner for Cushman & Wakefield in Scotland, said, “From an investor perspective, interest remains largely focused on prime, modern assets of £30m to £100m lot sizes, as well as older, well-located stock with strong refurbishment angles. The UK student accommodation market is usually dominated by international, institutional buyers, although of late we are seeing increased competition from home grown entities.”

Murray also adds, “A lack of portfolios coming to market is having a substantial impact on transactional volumes. However while deal numbers are down, Cushman & Wakefield has full national coverage on current pricing.” 

The report concludes by urging investors to consider affordability challenges to prevent an oversaturation of high-end developments. It highlights concerns among over 75% of students regarding rising costs affecting academic outcomes. Additionally, the Scottish student loan system’s divergence from the rest of the UK is noted, with Scottish students expected to receive 28% more than their English counterparts in the academic year 2023/24.

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