The UK’s purpose-built student accommodation sector will reach £53bn by the end of next year.
The sector is expected to rise by £2.7bn from 2018 totals of £50.5bn, according to Knight Frank forecasts.
It anticipates that some 29,000 additional beds will be delivered in 2019, bringing the total to more than 600,000. This equates to an average of £87,000 per bed.
Investment into the sector will remain largely dominated by North American and Asian finance, with strong appetite from the US, Singapore and Hong Kong.
Knight Frank is predicting 2% growth in rents and said existing players will look to build on newly acquired portfolios.
James Pullan, global head of student property at Knight Frank, said: “This uptick in delivery is a very significant contribution to the UK’s housing shortage, helping to ease the pressure on existing housing stock.
“As we look forward to 2019, the focus on student accommodation has never been so acute and with several universities facing financial challenges, as well as the potential impact of the Augar Review on tuition fees, universities must ensure that they get their accommodation offering right.”
He said the student accommodation sector has continued to attract investment, standing out against more mature assets such as offices. “The asset class offers a stable income stream, with strong year-on-year rental growth prospects.”
2018 saw a combination of private equity and institutional money invested into student accommodation. Landmark deals included Singapore Press Holding’s acquisition of Unite’s £180m Mayflower portfolio and Cambridgeshire County Council’s £38m acquisition of Brunswick House from Apache Capital, with the highest yield paid by a council pension fund for direct-let student accommodation.
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