Universities Increase Their Capital Spending on Construction Projects

Posted by Richard Ward in ,

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British universities have increased their spending on new buildings by 43% year-on-year in the last six months, as institutions look to expand their campuses and attractive lucrative foreign students.

Contracts totalling £1.5bn have been awarded, five of which are worth over £50m each. An additional £2bn of contracts are planned between 2017 and 2020, according to Barbour ABI, the construction analysts.

Since tuition fees were changed, universities have focused on improving their facilities in an attempt to attractive prospective students in an increasingly competitive market. However, the latest spending does not take into account the recent Brexit vote and it's unclear as to what impact it will have on continued investment in the sector.

In the meantime in many instances, award-winning architecture is being designed as institutions look to attract fee-paying students, whilst also enticing academics.

It's understood that University College London signed the largest bank loan in British university history, borrowing £280m from the European Investment Bank to put towards building a new campus in east London and to refurbish its existing facilities. Overall the project is estimated to cost £1.25bn.

According to the Higher Education Funding Council for England, the organisation responsible for monitoring the financial health of the sector, capital spending between 2015-16 and 2017-18 will top £17bn and will therefore be 60% higher than it has been in the preceding four-year period.

However, the organisation warned that any small change can have a material impact on the industry and warned that the sector's increased borrowing and reduced liquidity are unsustainable in the long term due to universities fine margins.