Privately owned, purpose-built student accommodation is set to top university-owned housing in total value by the end of 2017.

Student accommodation

Knight Frank’s latest market analysis shows the value of private sector beds is now equal to the value of university-owned beds at £22.9bn.

With 25,000 private sector beds expected to be delivered in 2017, the private sector was likely to account for more than 50% of the total student accommodation market by value at the end of the year, said James Pullan, head of student property at Knight Frank.

“The private sector is now dominating the development of purpose-built student accommodation in the UK, with universities becoming increasingly reliant on the private sector to deliver accommodation for their students,” he said.

However, the number of university-owned beds, which currently stands at 304,904 beds versus 244,477 in the private sector, would remain higher.

Student Beds data

Sarah Jones, director of research and development at Empiric Student Property, said students who wanted to get ahead in the labour market sought out the best universities and were prepared to make the associated investment in accommodation.

“Students desire the full experience, the best teaching facilities, living standards and the city experience,” she said. “Purpose-built can give them that.”

Countercyclical sector

Luke Kemp, director of student accommodation at Colliers International, added that some university stock was “quite dated” as funds were being channelled towards improving teaching facilities and attracting staff instead.

Separate research published this week by Cushman & Wakefield found that average rental growth had risen from 2.3% last year to 2.9% this year, driving interest in the sector from investors and developers.

An added attraction is the sector’s ability to perform well during downturns. “The sector is countercyclical in recession,” said David Feeney, an associate in the Cushman & Wakefield Student Accommodation Advisory team.

“When there is a downturn in the market, retail, logistics and office all feel the impact but demand remains strong for student accommodation.”