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Student housing sector booms as tuition fee hikes loom

Almost £840 million was invested in the development of student accommodation in 2011, new research by CBRE has revealed

The stable income on offer amid a tumultuous year helped more than double the £350m invested in the sector in 2009, reported sister title Construction News.

Rents have grown by four per cent regionally and by nearly five per cent in London during 2011 with occupancy rates currently at around 99 per cent on average.

CBRE anticipates that rather than leading to an overall decline in student numbers, substantial increases in higher education fees will drive a shift in the type and composition of the student population.

Overseas students will play an increasingly important role in UK higher education with international student numbers anticipated to increase by an average of three to six per cent.

CBRE head of residential research Jennet Siebrits said:  ‘Any uncertainty in the wider higher education market is not reflected in the accommodation sector and we expect the strong rental growth to continue next year.

‘Student accommodation is more attractive than many other asset classes in the current climate and we have seen increasing interest from relatively new parties seeking to diversify their portfolios. While investor appetite will remain strong next year, it is narrowing its focus on well-located schemes that have long-running agreements with good universities.’

The private rented sector still houses the highest proportion of students at 27 per cent, followed by institutional halls and students’ families both of which house 19 per cent of the population.

 

Comment: BDP chair Tony McGuirk

 

It is very apparent that a number of forces are in play regarding residential accommodation for students.

Tuition fees have created more of a consumer attitude in students regarding both their teaching and their living quality which most universities are looking to respond to with new schemes.

Local Authorities aware of the competition for rented housing are taking more strategic steps for new student provision to alleviate the effect on families seeking rented accommodation. This has obviously been exacerbated by recent announcements by government regrading housing benefits and the effect recently reported by the Chartered Institute for Housing, seeing the competition in the private rented sector even more fierce.

We are also seeing a new trend in today’s students for the better or more serviced living accommodation provided by modern student residences within universities with trends to enjoying living within larger student groupings for interaction, common experiences and safety often enjoyed within the university campus. This has also been running in parallel with the significant expansion over in the 60s and 70s (new) universities which by their very being were located in greenfield campus settings.

 

 

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