Supply & Demand

It is unlikely that student housing providers will be able to immediately tap into this new source of unlocked demand and so in the shorter term it is the supply and demand dynamics which are most important to identifying markets for investment.

Demand indicators

To help identify those markets that are most suitable for investment, we have created a ranking model for university towns and cities across the UK based on a number of inputs which we have examined in more detail in this section.

UCAS applications

The relative performance of applications gives an early indicator of demand for the coming year. With the increase in tuition fees up to a maximum of £9,000 per annum for the 2012-13 academic year, university applications fell by 6.7% on the previous year but have recovered slightly (2.7%) for the 2013-14 year.

However, demand from outside of Europe has continued to grow during this period, particularly from the Far East, which has seen average annual growth of 8.5% over the last six years.

Student numbers

In terms of actual demand, the growth in student numbers at individual institutions is arguably the most important component although it is also important to understand the demographic profile including if they are domestic or international and whether they are likely to form demand for bespoke student accommodation.

The overall 0.4% fall in domestic student numbers between 2010-11 and 2011-12 was counterbalanced by a 1.7% increase in international students leaving student numbers broadly flat overall but this hides a wide variety of performance across different towns and cities.

Although some towns/cities may demonstrate strong growth for one or both types of student over the period, strong growth may also hint at greater volatility in student numbers.

University rankings

University rankings are usually the first stop for prospective students and our analysis of those provided by the Sunday Times University Guide shows a trend between ranking and the recent growth in overseas student numbers.

Those universities that have higher rankings continued to see growth in overseas students while those ranked outside the top 80 have generally seen a fall in numbers.

Taken from
Spotlight: UK Student Housing