Record-breaking year for student beds in Birmingham

Record-breaking year for student beds in Birmingham

A record-breaking 30,000 new student bed spaces have been delivered in 2017, taking the total number of purpose-built spaces to 602,000 in the city.

Cushman & Wakefield’s UK Student Accommodation Report 2017/18 looks at the student accommodation market across the UK, including demand and supply of new developments.

While the numbers of newly delivered en-suite and studio spaces have both increased significantly, the supply of studio rooms has increased by 106% since 2014.

Overall rents per bed space in student accommodation increased 2.9% between academic years 2016/17 and 2017/18, marginally above the 2.7% seen during the same period in the previous year.

Birmingham is now home to 21,768 purpose-built student accommodation bed spaces for the 2017/18 academic year, with the city maintaining its position as being home to the fourth largest number of bed spaces in the UK.

Birmingham is a top tier university city and home to four significant institutions which attract a large number of international students, which has led to high investor and developer interest in the city.

An additional nine blocks opened in 2017/18 accounting for 1,643 bed spaces to meet the increasing demand from international students and those arriving to study from the rest of the UK.

Despite ongoing intensive levels of development, the demand-supply balance in Birmingham has remained healthy thanks to continued student number growth (particularly at the University of Birmingham) and the movement of BCU to the city centre.

David Feeney, advisory associate at Cushman & Wakefield, commented: “It is encouraging that the student accommodation market continues to flourish despite initial concerns following the EU Referendum and the impact of increased student tuition fees.

“However, in a number of cases studio development has been driven by higher prices rather than by true student demand, which now risks oversupply.

“En-suites and shared rooms provide a cheaper bed and more of a social experience, with communal and shared spaces.

“There is a real opportunity for developers to meet the demands for more affordable accommodation and provide more standard or en-suite rooms for students.

“Studios are 45% more expensive but do they offer a 45% better experience? It is all about the value of the experience and this will increasingly drive students’ preferences for accommodation.”

Full-time student numbers are now 4% higher than in 2012/13, when maximum tuition fees rose to £9,000 per year, and continue to drive growth in the sector.

Higher-tariff universities grew enrolments by 1%, with medium-tariff institutions growing by 2%, proving that despite some concern about the impact of the Brexit vote on student numbers, there remains a considerable demand for new accommodation.

In terms of the investment market, final recorded transaction volumes in 2016 of £4.1bn were the second highest total on record but well below the 2015 total of £5.7bn.

Transactions in 2017 to-date are ahead of this time last year at £3.61bn (£3.25bn in 2016) but unlike 2016 there is a further £1.05bn under offer and £1.5bn in the market, double the totals for last year.

David continued: “The UK is still a global education hub, attracting the best students from around the world.

“Even with Britain’s exit from the EU progressing, the relatively weak Pound has attracted additional applications from non-EU students, with their numbers rising 5% over the last year. It is a key market, as 23% of the UK student population is now from overseas.

“In funding terms, foreign students have a much greater impact on the income profile of UK universities, making up 26% of all tuition fee income.

“It is clear that the UK remains a highly attractive place for students to study and this continues to be reflected in the growing student accommodation market.

“The sector will continue to prove attractive to investors and if developers are able to meet student demand for en-suite rooms, rising student numbers will provide suitable and reliable returns.”