The UK’s 67m population is growing at a healthy 1% pa clip, albeit there was a slight dip in the birth rate at the turn of the Millennium (see below). Leading this year to a 3% fall in the number of 18 year olds, and a 1.9% decline in British students accepting places at University (UCAS). Offset partially by a 3%-4% increase in overseas applications, leaving the total 2018/19 freshers’ intake very marginally lower (-1.1%) at c. 530k.
The good news is that this trend is set to reverse strongly between 2021-31. And besides, the temporary pause is having little impact anyway on demand for purposebuilt student accommodation (PBSA), especially at traditional red-brick universities. Indeed there are presently 1.8m UK full-time students, of which >1m rent but only 625k live in PBSA: split 60% university vs 40% corporate operated.
David Feeney of Cushman & Wakefield (C&W) adding that “demand remains strong”. Here, students are trading up, particularly in their 2nd and 3rd years when typically forced into lower quality digs. While landlords are still attracted by the ~4.3% Net Income Yields (NIY) on offer in central London and ~5% at Russell Group colleges. In fact C&W reckon £4.0bn of PBSA stock will be transacted in 2018 vs £4.1bn LY and £3.2bn 2016 - again indicating favourable conditions.
Enter Watkin Jones, one of the country’s largest student property developers and managers. Yesterday, the company said that it had exchanged contracts on a new 599 bed site with planning consent in Wembley (London) from Kelaty Propco Limited for an undisclosed fee. The project is scheduled for completion at the start of the 2021/22 academic year – adding approx 20% to that period’s output, and ~6% to the entire >10,000 unit pipeline.