Student Accommodation
The UK Market

The Market

The demand for UK Higher education is very healthy

  • The number of students studying in the UK’s universities was the highest ever number in 2015/16 (latest available HESA), rising to 1.74 million full time students and growing at a Compound Annual Growth Rate (CAGR) of 1.2% since tuition fees rose to £9,000 per annum for home and EU undergraduates in 2012
  • Government caps on student numbers in the UK were removed altogether in 2015/16, and in 2016 the number of applicants to UK universities was 564,000
  • Demand from 18 year old students is similar to last year (at 272,330), despite a fall of 1% in the 18 year old population - a demographic dip in the number of 18 year olds which takes place until 2024 (when levels recover to those seen in 2015)
  • The Department of Education reported the 2014/15 initial participation rate for UK18–30 year olds had risen to 48%, from 42% in 2006/07
  • 18% of full-time students in the UK are postgraduates
  • The increase in fees, and expectations of good employability outcomes is driving more students to study away from home. A flight to quality universities has led to polarisation in the levels of recruitment achieved by different institutions

Students from outside the UK are an important part of the student population

  • Students not from the UK, including both EU and non-EU students, account for 23% of the full-time student population in the UK, some 397,500 students
  • Student demand has steadily increased with non-UK student demand rising 2% per annum compounded, since 2012
  • The number of international students is expected to double globally by 2025
  • According to UNESCO, in 2013 the UK attracted 10% of the 4.1 million students leaving their home country to study, second only to the US who attract 19%
  • International students are attracted to the quality of the UK's universities and teaching, a globally recognised qualification and the opportunity to experience life in the UK
  • The rise of the middle classes in many nations has increased demand for higher education overseas, as students and their families wish to demonstrate global citizenship
  • International students were reported by Universities UK and Oxford Economics to be worth £26bn to the UK’s economy in 2014 (report produced in March 2017 http://www.universitiesuk.ac.uk/policy-and-analysis/reports/Documents/2017/briefing-economic-impact-international-students.pdf)
  • Number of students enrolled outside of their country of citizenship: 1975-2025 (Estimated): 4.8% CAGR
  • “We are committed to increasing education exports from £18 billion in 2012 to £30 billion by 2020. We will not achieve that goal unless we continue to attract the brightest and best from around the world” Jo Johnson, Universities and Sciences Minister

Student Accommodation is a Robust Asset Class

  • UK student accommodation yields have remained relatively stable since 2006, suffering less volatility than other real estate sectors
  • Student accommodation rental growth in the UK of 3% per year between 2014 and 2016, has surpassed all other real estate asset sectors and significantly outpaced RPI
  • Total investment in the UK student accommodation sector reached almost £6 billion in 2015 and £3.5bn in 2016, with increasing investment from international sources
  • Significant pent up demand for transactions has been witnessed through the number of bidders for each portfolio sale in recent years, those unsuccessful bidders retain a strong appetite to invest here

There is a shortfall of student accommodation – both volume and quality

  • Today’s students want “plug & play” accommodation (bills, internet etc.) in very convenient locations
  • Purpose-built accommodation remains well below student numbers in key UK university cities and does not support the strong demand or growth of successful universities
  • London is particularly badly affected by a shortfall in supply, and affordability, but many of the UK’s top institutions are held back by lack of accommodation
  • Beds which are being built do not cater for some of the most strategically important groups of students to universities, including postgraduates
  • Postgraduate / sponsored students are often required to live in purpose-built accommodation, compounding the issues
  • Investment into University’s own accommodation is well behind the level needed to address both shortfall and the maintenance issues on campus
  • Pressure on Houses in Multiple Occupation (“HMO”) through implementation of licensing and Article 4 Direction in many cities means that overall supply of student housing is being constrained

Who we are

The Empiric management team has a long track record in the acquisition, development and management of student accommodation assets in the UK.

Financial

Empiric is an internally managed UK REIT investing in premium student accommodation in the UK and was listed on the Main Market of the LSE in June 2014.

INFOGRAPHIC: Student population with access to purpose-built accommodation | Empiric Student Propert

Questions? Get in touch.

Contact Us

Empiric Head Office
Empiric Student Property plc
Swan House, 17-19 Stratford Place, London W1C 1BQ

info@empiric.co.uk
+44 (0)20 3828 8700

Media Contact

James Benjamin
Partner
Newgate Communications LLP

empiric@newgatecomms.com
+44 (0)20 7680 6550

Broker

Stuart Klein
Managing Director, Corporate Broking
Jefferies International Ltd

stuart.klein@jefferies.com
+44 (0) 20 7029 8000