StuRents 2022 Annual Report - Highlights
6th Dec 2022
First Year Accommodation Shortfall
The student accommodation market in the UK consists of university-managed accommodation, private operators of purpose-built student accommodation (PBSA) and houses in multiple occupation (HMOs).
Typically undergraduates embarking on their university studies are moving away from home for the first time and look to their university to help them find suitable accommodation. However, most institutions are increasingly relying on the private sector to fulfil this task.
In recent years, growth in full-time, first-year undergraduate students in the UK has outpaced the growth in university-managed beds. The latest figures provided by HESA show that there were almost 604K first-year students in full-time studies in the 2020/21 academic year, up 14.9% over the past 5 years. Whilst demand grew by 2.8% per year on average, the rate of growth in university-managed accommodation was just 1.8% per year, highlighting the mismatch between the two.
Of course, the private sector has been quick to realise the potential of the student market and growth in privately managed accommodation has outpaced increases in university beds. In 2019, the number of beds operated by private providers surpassed those managed by universities, thereby becoming the more prevalent provider outside of HMOs.
Analysis conducted by the research team at StuRents reveals which locations and institutions are most exposed to the private sector and therefore where this under-provision is highest.
To understand which locations and universities have a shortfall of university beds, relative to first-year students, we have utilised data available from HESA to more accurately understand the demand for accommodation by taking into account students living at home or not in attendance at the provider.
With this in mind, initial estimates suggest there was a shortfall in university-managed accommodation of ~125K* beds in 2020/21. Excluding London, this figure falls to around 100K students.
*Note these approximations include halls of residences with postgraduate rooms, and thus the actual figure may be higher than stated above
Breakdown by Location
The delta between first-year undergraduates and university-provided accommodation can vary significantly by location.
Dundee has the largest shortfall of beds by percentage, with an additional ~3K required to meet the demand of 1st year undergraduates. Elsewhere, in Leeds almost 8.2K 1st year undergraduate students have to rely on private PBSA or HMOs for their accommodation. On an institutional basis, Leeds Beckett university recorded the largest underprovision of approximately 2.6K beds, which equates to around 63% of first-year students unable to access a university-managed bed.
Glasgow also had a significant underprovision, with more than 5K 1st year undergraduates unable to access a university bed, leaving around 61% of students having to seek accommodation elsewhere in 2020/21. In Birmingham, this figure stood at almost 8K students, whilst in Manchester ~7.7K additional university beds are required.
Figure 1 highlights a sample of locations in the UK with significant shortfalls.
Figure 1: University Bed Underprovision by Location (ex. London)
Source: hesa.ac.uk; StuRents.com
Breakdown by Institution
Excluding higher education providers that do not manage any beds and focusing on the larger institutions, Coventry University has one of the largest shortfalls at more than 7.8K. Equally, Sheffield Hallam would require more than 7K beds if it were to accommodate all of its first year undergraduates, albeit as a location there is an oversupply, which will explore next.
Figure 2 below details the top 10 institutions in the UK with the largest shortfall of beds for first-year undergraduate students.
Figure 2: Underprovision by Institute (ex. London)/b>
Source: hesa.ac.uk; StuRents.com
Analysing the data more broadly, we can also begin to understand what proportion of the total PBSA market relies on domestic 2nd and 3rd years to fill any shortfall in demand.
If we assume that domestic first-year students and all international students will require some form of PBSA, either provided by the private sector or via higher education institutions, then we can ascertain which locations have an overall shortfall or surplus, relative to this core demand. Of course, in reality, there will be a proportion of the 2nd and 3rd-year domestic market that will book PBSA, but the likelihood of this will depend on other factors such as HMO pricing and affordability.
Sheffield comes out as one of the locations that are most heavily reliant on domestic students to fill this core demand shortfall, with ~50% of PBSA rooms required to be filled by this cohort. Similarly, Aberdeen (45%) and Leicester (41%) are exposed to changes in demand from 2nd and 3rd year domestic students.
At the other end of the scale, there is enough international and 1st year demand to fill almost all PBSA beds in Nottingham and Bristol, with just 16% and 8% of beds left for other domestic students. St Andrews is also another location where PBSA appears to be well aligned with this core demand.
Over recent years, private operators of PBSA have taken up the slack left behind by higher education institutions and this trend looks like it will continue, with the majority of new planning applications being put forward by private companies rather than universities.
Whilst the data analysed helps to highlight the shortfall or surplus of PBSA accommodation, the insights are backwards-looking. Since 2020/21 some locations have received a significant number of new beds, whilst demand growth between institutions has also varied substantially. Both of these changing factors will impact the current and future dynamics of each location and should be incorporated when assessing an opportunity.
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