In last year’s student housing report (2013), we looked at how the purpose-built student accommodation market could play its part in easing the housing crisis. We identified a number of locations across England and Wales where the provision of new purpose-built student housing could release 66,000 homes back into the market. This would involve increasing the market share of purpose-built student accommodation at the expense of houses in multiple occupation (HMOs).

This year we have expanded our analysis to include Scotland where we have identified an additional 11,000 homes that could be targeted. The majority of these are found in Glasgow (4,200) and Edinburgh (3,400) but there are significant numbers in Aberdeen (1,900), Dundee (800) and Stirling (400).

To accommodate these students would require the development of an additional 30,000 new student beds. This would equate to doubling the size of the university and privately owned student accommodation market in Scotland.

The purpose-built student housing sector has already benefitted from the growth in student numbers. In many markets, the sector has gained market share, with some operators seeing an increase in final year undergraduates returning to halls to focus on their exams.

With the threat of falling demographics, many operators will be tempted to continue their focus on the higher growth overseas student market. However, for those that manage to build a product at a price that is attractive to the more cost-conscious domestic market, there is a potential market for a further 290,000 beds across the country.

Although the total number of homes (77,000) that could be ‘unlocked’ is much lower than those regularly announced as targets by political parties, the localised effect of this could make it a useful part of a much broader solution. In many of the largest student markets, the amount of housing that could be released is equal to 2-3 years of recent housing delivery. There is also the additional benefit of the New Homes Bonus boosting local tax revenues.

If developers and operators wish to tap into this market opportunity, then they need to be aware of how they are perceived by local residents and decision makers. They need to present purpose-built student accommodation as a solution to problems in the wider housing market rather than creating new ones.

Issues such as car parking, noise and other anti-social behaviour can all be minimised by active management in a purpose-built block in a way that HMOs can’t. However, the regular appearance of purpose-built student blocks on the list of worst looking new buildings is not helpful to the public perception.

Click the below image to enlarge

Taken from
Spotlight: UK Student Housing 2014