Substantial Decline in Student Visa Numbers

International students remain a critical demographic group for the purpose-built student accommodation (PBSA) market. However, changes to visa requirements and a depreciating currency in some countries have resulted in substantial declines. 

Key findings

• The number of student visas issued has slowed since changes to requirements
• Those issued to Indian students fell by 13.7% in Q4
• The share issued to Chinese students is set to rise
• Changing demand profiles will likely impact PBSA demand

Changing demand

From January 2024, the UK government changed rules around student visas, meaning most international students are no longer permitted to bring dependents. The only exception was for students studying on a postgraduate research programme. This effectively made the UK a less attractive destination for higher education.

At a national level, this has resulted in a fall in the number of student visas being issued. Those granted in Q3 and Q4 fell year-on-year (YOY), as highlighted below. 

Source: Gov.uk

Isolating those issued to Indian students, numbers are down by 13.7% in the 2023 calendar year. This marks the first time since at least 2017 that there has been a year-on-year fall. Similarly, those issued to Nigerian students dropped by 63.4%. 

More positively, Chinese student numbers remained robust, bouncing back from a decline reported in 2022. 

Source: Gov.uk

Looking more closely at when the visas are issued, as highlighted below, the majority were issued in Q3 rather than Q4. However, the trend is clear, since the changes to visa requirements were announced in July 2023, sentiment towards coming to the UK has shifted.

Source: Gov.uk

Another contributing factor is changes to local currency. Whilst there has been a decline in the value of the Rupee over the last 12 months, the 35% drop in the value of the Nigerian Naira has been more severe. These currency fluctuations will naturally impact the ability of students to be able to afford to come to the UK, causing another barrier for those who were not previously put deterred.

Source: Gov.uk

These declines have therefore altered the overall mix of visas being issued. In the latest quarter, around 36% of those issued were to Indian students. This compares to 62.6% reported in the same period a year earlier. Therefore, whilst last year more than 120k were issued to Indian students, versus 109k to those from China, it’s highly likely that China will again become the leading country of origin in 2024. 

Source: Gov.uk

What the data shows us is that demand patterns are not linear and will shift over time. This was also reflected in the latest data from the Office for Students, which shows huge year-on-year swings in demand for some institutions.

For investors and operators, it's therefore critical to keep up to date with the latest trends to ensure the product on offer is suitable for possibly changing local demographics.

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