Student accommodation projects on the rise

As the new academic year gets underway, firms involved in building accommodation to house the growing number of students in the UK are becoming busier.

The value of project starts on student accommodation schemes rose to £849 million in the three months to July, double the value in the same period a year earlier, according to recent Glenigan data. In all, student homes accounted for 7% of total housing projects getting underway.

A series of factors is driving up activity in the sector. Today, student numbers are on the rise, and there is a growing shortage of places in purpose-built student accommodation (PBSA) schemes.

Applicant numbers through the UCAS university admissions agency were up by 1.3% compared with the same point last year, with notably healthy growth amongst UK 18-year-olds (+2.2%) and overseas students (+2.2%).

Demand for new student accommodation is strongest in cities with highly regarded Russell Group universities. Today, London, Nottingham, and Leeds are expected to see the largest increases in supply, according to a recent report from agents Knight Frank. Glenigan data (see below) details opportunities in all these centres.

Demand exceeds supply

For now, demand for student accommodation continues to exceed supply.  This year, just 1,609 new student beds had been added by the end of July, with 17,802 set to be delivered in time for the start of the 2025/26 academic year in October.

Unite, the largest owner and developer of UK student accommodation, said earlier this year that the new supply of PBSA was down 60% on pre-pandemic levels, as high construction costs, planning backlogs, and building safety approvals take their toll.

Meanwhile, private landlords who have traditionally rented homes to students in university cities are retreating from the sector, deterred by high mortgage costs and tighter regulations.

But against a background of supply shortages, investment in the sector is growing. Knight Frank notes that £1.6 billion was invested in UK PBSA in the first half of this year, well above the long-run average of £1.1 billion.

Today, Unite has a fully funded pipeline of off-campus accommodation, worth £925 million and concentrated around Russell Group universities.

Unite also has an on-campus pipeline of 4,300 beds for delivery over the next three to five years. In May, the group unveiled a second university joint venture with Manchester Metropolitan University for 2,300 new beds in the city centre. This follows a similar partnership with Newcastle University, and the group is in talks on accommodation JVs with other academic institutions.

Opportunities in the pipeline

Glenigan data provides details on a series of PBSA schemes in the pipeline, which offer opportunities for new work around the country.

In Leeds, for example, detailed plans have been granted and contracts awarded for a £44 million scheme of 205 student apartments for Brigade Central in the city’s Kirkstall Road. Work is due to start later this year and run for 11 months on a scheme involving over 6,500 sq m of space (Glenigan Project ID: 23351417).

Meanwhile, in Birmingham, detailed plans have been submitted for a scheme of 239 student flats in a scheme worth £44 million at Frederick House PBSA. The scheme has been recommended for approval, with work set to start early in the new year and run for 20 months (Glenigan Project ID: 25035393).

Across the Midlands in Nottingham, a preferred bidder has been appointed on the £22.2 million Goose Gate Development involving PBSA with retail/café space (pictured). A preferred bidder has been appointed, and work is due to start early in the new year (Glenigan Project ID: 21345593).

Major schemes are also in the longer-term pipeline in the sector in London. Detailed plans have been approved for the £79 million Stoll Square Student Accommodation scheme in Cricklewood Broadway, involving some 826 units. Work is pencilled in to start next year and run for 48 months (Glenigan Project ID: 20069813).

Elsewhere in the capital, detailed plans have been approved for a £57.7 million scheme at High Road, Leyton, for J Wool Group. It involves some 261 student flats with work set to start this autumn and run for 22 months (Glenigan Project ID: 25004723).