Three recent large-scale applications for student housing development projects have more than doubled this year’s total number of units in the planning system.
A month ago, only around 1,000 units had been applied for since the beginning of 2017, but over the past few weeks applications in Whitechapel, Wembley and Alperton have boosted those numbers to 2,800 – in line with the trend seen over the past few years.
Another flurry towards the end of the year could push the figure to heights not seen across the capital since 2013.
Looking at EG figures over the past six years, it could be argued that when London’s residential sector was at its most bullish – from 2014-16 – student housing took more of a back seat role.
However, between 2011-13 student housing peaked, highlighting the fact this alternative asset class can act counter-cyclical to the wider residential market.
With many calling the top of the market, especially in the prime and city fringe locations where student housing has flourished, could we be seeing another rush to provide purpose-built student accommodation?
The fundamentals for student housing in London remain strong. It is the world’s largest student market, with more than 300,000 full-time students, but there are just 88,950 PBSA beds, according to JLL.
That means there are more than 210,000 full-time students who are unable to access the PBSA sector, despite the number of beds increasing by 125% since 2007.
As far as supply-and-demand imbalances go, investors could do worse than look at student housing as a way to diversify income streams and asset strategies.
Furthermore, London has four of the world’s top 50 universities, with a quarter of all international students studying in the UK based in the capital, according to JLL’s London Student Housing report.
These students are particularly enamoured with PBSA. As they are far from home, they want to live in a like-minded community with the ease of service that goes with it, as opposed to the buy-to-let, HMO sector which takes on the bulk of student intake in the form of flat shares.
Students from the Far East are also more comfortable living in towers, of which more and more of the market represents due to high land values and the city-centre living offer being promised.
EG data reveals that since 2002, more than 44,000 PBSA units have completed across the capital.
While both the application and construction start rate has slowed in recent years, the pipeline remains healthy, with 5,300 units under construction and 8,400 with permission but yet to start. A further 2,000 are awaiting a planning decision.
To send feedback e-mail paul.wellman@egi.co.uk or tweet @paulwellman eg or @estatesgazette
