UK Student Accommodation: Market Size, Trends and Forecast

The higher education market in the United Kingdom, together with its allied industries, is growing steadily. The UK student accommodation market has rapidly expanded owing to the growth of the higher education sector. Integrated courses are one of the primary reasons for the increase in international students in the UK. International students can benefit from several attractive advantages of integrated courses, which combine undergraduate and postgraduate studies into a single, simplified curriculum.

Student housing providers constantly adapt to student needs and growth trends to increase their revenue and gain a competitive edge. This blog will highlight the UK student accommodation sector dynamics and explore the trends driving this competitive sector.

UK Student Accommodation Market Size

The investment value of the UK student accommodation sector is anticipated to grow at a CAGR of 5.45%, from US$8.52 billion in 2024 to US$11.11 billion by 2029 (Source: Mordor Intelligence). The influx of international students studying in the United Kingdom has been a key driver of this growth. The number of students travelling from other countries has been steadily increasing over the years, reaching 605,130 in the 2020–2021 academic year. Of students aged 18 to 24, more than 45% were enrolled in school, and some were also working.

The robust growth of projects in the pipeline is a testament to the sector's confidence in the future of student housing.

Major Trends Driving the UK Student Accommodation Market in 2024

The student housing industry has been expanding significantly. The UK student accommodation market is driven by a number of key dynamics, reshaping the country’s growth in higher education. A number of reasons have contributed to the increase in student demand, including a continued increase in international student enrolments, a solid expansion of the UK higher education sector and significant investment in new student housing developments. The major trends driving the student accommodation market are:

1. Steady Rise in International Student Enrollments

Universities in the UK are renowned for their top-notch standards of teaching and academic excellence. Due to this, the country continues to attract students from every corner of the world. The rise in the number of international students from China, India, Nigeria, etc., increases the demand for student accommodation and makes the industry profitable.

2. Growth of the UK Higher Education Market

An enormous number of international students opt for higher education in the UK each year due to its top-notch educational programs and solid global standing. The higher education sector has a significant impact on the UK economy, supporting over a quarter of a million jobs and contributing over £130 billion. These figures suggest that the UK student housing sector will see favourable growth in the coming years alongside the growing UK education market.

3. Investment in New Student Housing Projects

The growing number of new construction projects reflects growing confidence in the student accommodation market. There is a strong influx of new accommodation as investors look to capitalise on rising demand. In 2023-24, 12,195 new beds were added overall, marking a low increase in PBSA delivery (Cushman & Wakefield). However, with the rising demand for student beds, major players like iQ, Unite, CRM Students, and others are expected to invest heavily in this sector.

4. Rental Growth Potential

The strongest year of rent growth in this sector in its history was 2022-23. The 2023-2024 academic year observed an overall rent growth of 8.02% (Source: CW Student Accommodation Report) due to a combination of factors, including:

• Strong student population growth in almost all major markets
• Rising operating and development costs
• High inflation and a slowing pace of new bed deliveries in both universities and the private sector

Higher-end operators and owners have driven significant rent growth in 2023, with premium PBSA establishments seeing an average rent growth of 12.5%. Cities like Durham, Newcastle, and Edinburgh have witnessed rental growth of more than 11% in the 2022/23 to 2023/24 period.

5. Supply Pipeline & New Developments

The 20 largest student cities across the UK contain only half a million PBSA beds with over 1.3 million students (Source: Monitor ICEF). This indicates the supply-demand disparity in the market. UK Residential Research Analyst Corranne Wheeler suggests that the target student-to-bed ratio should stand at 1.5:1.

In 2023, the development pipeline revealed a total of 25,700 beds under construction and scheduled. As of 2024, 69,500 beds are in the pipeline with full planning permission granted, and a total of 95,000 more beds are currently in the pipeline. (Source: Knight Frank)

6. Rise of BTR Student Housing

The rise of UK build-to-rent (BTR) has been a trend in the UK student housing market. The BTR sector recorded an investment of £4.6 billion, as recorded by Knight Frank in 2023. Further, BTR projects are being closely repurposed into student housing owing to their similar business models. For example, Unite Students acquired 180 Stratford, a 178-unit purpose-built build-to-rent property in Stratford, East London, for £71 million.

What's in Store for the Future of the UK Student Accommodation Market?

In the UK's dynamic student housing market, operators and investors must contend with conflicting supply and demand pressures in addition to changing public perceptions of living away from home and higher education.

In conclusion, economic, governmental and societal issues affect the UK's student housing sector, which is at a crossroads. Although the industry presents opportunities for expansion and innovation, investors must consider the new challenges and changing student preferences. To meet demand, control spending and adapt to the changing demands and expectations of their student clientele, operators and investors must successfully negotiate these complications to maximise their returns and stay on top of this lucrative investment sector.

Get amber's in-depth study of market data and student movement trends to gain a deeper understanding of the UK student accommodation industry. Investors can increase their return on investment by listing their property on amber and taking advantage of this fast-growing market.

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