COMMENT Universities in the UK are facing growing financial pressures. The cost of running and maintaining their estates continues to rise, with many facing difficulties with ageing buildings and RAAC issues, while income streams from both UK and overseas students have fallen steadily in recent years due to the reduction in the number of students and tuition fee caps preventing rises in line with inflation.
This means many institutions are now faced with few alternatives beyond significantly reducing staff numbers and cutting the number of courses they offer in order to balance budgets. Much-needed capital projects to improve the quality of accommodation and teaching are also on hold, further challenging the recruitment of new students.
While these challenges are significant and very pressing, there is hope. Many UK universities are sitting on a vast and untapped resource that, if leveraged correctly, could offer a sustainable solution to both their financial situations, the housing crisis and regional economic growth.
Staying on course
Higher education institutions own more than 36,000ha of undeveloped land in the UK, representing a significant but often overlooked opportunity. By developing real estate strategies that create both short-term capital and recurring income streams, universities can diversify their revenue sources and reduce their dependency on traditional funding models. A well-structured real estate portfolio could be used to support higher education’s core mission.
Ensuring the long-term viability of higher education institutions is crucial to the national and regional economy. Universities and colleges play a critical role in shaping the UK’s talent pipeline, hosting nearly 3m students. Driving local economies, higher education supports 768,000 full-time roles, valued at £116bn in general economic output. Finding alternative routes to securing the future of universities is essential for driving national economic growth.
Working in partnership with local authorities, developers, investors and the real estate sector, universities can protect their long-term futures while contributing to the delivery of much-needed housing and community facilities. By unlocking parts of their land into mixed-use developments – including affordable housing, student accommodation and community facilities – universities can provide land for thousands of urgently needed new homes to regenerate the areas in which they are located. This strategic approach would not only contribute to regional economic growth but also solidify the university’s role as a local anchor institution.
These developments could take a variety of forms: university-owned land could be used for private and affordable housing projects, creating vibrant communities that also benefit the local student population. Collaborative development projects, combining academic expertise with private-sector investment, could result in a sustainable source of income for universities while addressing the needs of local councils for new housing stock. And with the right partnerships, these developments could also incorporate spaces for research and innovation hubs, linking academia with industry and fostering local job creation.
Public-private partners
Avison Young is advising a number of higher education establishments across the UK, providing strategic property advice to maximise the potential of their estates. We are currently marketing over 230 acres of land for the University of Kent, which has the potential to deliver around 2,000 homes and social and community infrastructure.
We are also advising several universities across the UK on how to best utilise their estates to help fund and deliver new capital projects through procuring funding and development partners and by releasing surplus land to the private sector to deliver new development opportunities.
This requires collaboration across central and local government and for universities to work closely in partnership with private developers and investors to ensure the long-term and sustainable future of our higher education sector. The added benefits of regional and national economic growth and delivering significant number of much-needed private and affordable housing, as well as the required social infrastructure, should mean a clear and immediate focus is given to this significant opportunity.
Barney Hillsdon is principal and managing director of land and development at Avison Young
