UK Student Housing Market Sees Record Investment from Real Estate Developers
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Loading... - Thalia Doukas
- 18 Feb 2025
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The UK student housing sector is experiencing a significant surge in investment from real estate developers, with private developers signing a record 22 land deals for purpose-built student accommodation in 2024. These deals total an impressive £473 million (AUD $910 million), according to a recent report from real estate firm Knight Frank.
Among the standout transactions is Greystar’s acquisition of a former hotel, which is being transformed into the 1,014-bed One Medlock Street in Manchester. Additionally, Dominus and Cheyne Capital are converting an office block at 65 Fleet Street in central London into student flats. These developments reflect the ongoing transformation of urban landscapes across the UK, driven by rising rental demand and increasing student enrollments.
Katie O’Neill, an associate at Knight Frank and the report's lead author, noted, “The ongoing gap between supply and demand continues to support the sector, while affordability remains a key challenge for students.” Despite a significant drop in international student numbers due to stricter visa policies implemented by the previous Conservative government, the student housing market remains lucrative, characterized by high rental yields and a dense concentration of flats per development.
Official data indicates that UK private rental prices rose by 9% in the year leading to December 2024. Research from the Higher Education Policy Institute in 2023 revealed that rents for private-sector student flats in ten university cities were increasing at nearly twice the rate of university-owned housing. In London, the average annual student rent for 2024-25 reached £13,595 (AUD $26,170), surpassing the maximum student loan available for those studying in the capital for the first time.
Joe Lister, CEO of Unite Students, one of the sector’s largest developers, emphasized the importance of private investment in addressing the student housing shortage. Unite recently acquired a 444-bed site at Kings Place in Southwark, central London, as part of the 22 major deals made last year. Lister also highlighted the potential for acquiring existing housing assets from universities, noting that universities own approximately £30 billion (AUD 57.7 billion) of real estate. He stated, “We couldn’t do it in one go, but over 10 years there’s an opportunity to provide funding into the sector using our access to private capital.”
In addition to private land acquisitions, universities are increasingly collaborating with developers to construct new student housing. These partnerships often yield cost advantages, as developers can secure cheaper land while universities guarantee occupancy by directing students to these accommodations. For instance, last year, Newcastle University and Unite Students entered a £250 million (AUD $480 million) joint venture to develop around 750 new student beds for the university, further underscoring the sector’s growth despite financial pressures.
The UK student housing market is witnessing unprecedented investment from real estate developers, driven by strong demand and strategic partnerships with universities. As the sector continues to evolve, the focus on purpose-built accommodations and innovative financing solutions will play a crucial role in addressing the ongoing housing challenges faced by students across the country. With significant investments and collaborations on the rise, the future of student housing in the UK looks promising.
