The UK student housing sector has attracted record investment, with private developers signing a total of 22 land deals for purpose-built student accommodation in 2024, amounting to £473 million (AUD $910 million), according to a report by real estate firm Knight Frank. This surge in investment highlights the growing demand for student housing amid increasing student enrolments and rising rental prices.
One of the significant transactions in the sector includes Greystar’s acquisition of a former hotel, which is being converted into a 1,014-bed student residence called One Medlock Street in Manchester. Another notable deal saw Dominus and Cheyne Capital transforming an office block at 65 Fleet Street in London into student flats. These developments are part of a broader trend reshaping city skylines, as private developers capitalize on the growing demand for modern, well-equipped student housing.
Katie O’Neill, associate at Knight Frank and lead author of the report, explained that the ongoing gap between supply and demand continues to support the student housing market, although affordability remains a concern for students. Despite a drop in international student numbers following stricter visa policies, the market remains attractive to developers due to high rental yields and the density of flats in each development.
In fact, private-sector student accommodation often commands higher rents than university-owned housing due to enhanced amenities and modern facilities. Research from the Higher Education Policy Institute in 2023 showed that rents for private-sector student flats in major UK cities were rising nearly twice as fast as those in university-owned housing.
For example, the average annual rent for student accommodation in London for the 2024-2025 academic year reached £13,595 (AUD $26,170), surpassing the maximum student loan available for students in the capital for the first time. These escalating costs have led companies like Unite Students, one of the sector’s largest developers, to step in and invest in solutions to the housing shortage.
Unite Students has recently acquired a 444-bed site at Kings Place in Southwark, central London, and continues to explore opportunities to purchase existing student housing assets from universities. Joe Lister, CEO of Unite Students, emphasized the important role private investment plays in addressing the student housing shortage, noting that universities own approximately £30 billion (AUD $57.7 billion) of real estate, with the potential for long-term investment into the sector.
Additionally, universities are increasingly collaborating with developers to build new student accommodation. These partnerships allow universities to guarantee occupancy while developers benefit from lower land acquisition costs. For example, Newcastle University and Unite Students entered a £250 million (AUD $480 million) joint venture to develop 750 new student beds, further underscoring the sector’s resilience despite financial pressures.
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