UK student homes taking longer to fill on weaker overseas demand
[LONDON] The proportion of UK student dorms that are leased for the next academic year has fallen sharply as a post-pandemic boom that's lured a plethora of the world's biggest private equity firms begins to fade.
As of March, just 36 per cent of beds available for September had been signed, down from 46 per cent from a year earlier, according to data compiled by StuRents, an online portal for student accommodation.
That's the lowest since the company began compiling the data four years ago and represents a more than 15 percentage point drop from the peak in March 2023 when more than half of beds were already accounted for, StuRents' data show.
The historic under-supply of the kind of purpose-built accommodation that most appeals to wealthy overseas students has attracted a raft of global investors to the sector.
Apollo Global Management, EQT Exeter, Brookfield and Lone Star are among sellers currently offering £2.5 billion (S$4.37 billion) of student housing for sale, Green Street News reported, while Blackstone's vast IQ Student Accommodation business is among its largest real estate bets in Europe.
The post-pandemic surge in leasing caused by pent up demand 'has proved to be temporary,' said Richard Ward, the head of research at StuRents.
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'We have seen a softening in leasing velocity, particularly in markets where development pipelines resulted in an uptick in accommodation just as international student numbers, especially at the postgraduate level, began to decline.'
International students have become pivotal to the financial fortunes of both the UK higher education sector and the investors betting on student housing, given the higher fees paid and a propensity to stomach higher rents than domestic peers.
While the number of European Union applicants has fallen significantly since Brexit, until recently that has been largely offset by a rise in foreign students from outside the bloc.
But changes to visa requirements and increased competition from other countries have begun to impact numbers. And that's being compounded by a cost of living crisis that has encouraged some domestic students to skip university in favour of paid work.
The number of both UK and non-UK university entrants is significantly below the sector's forecasts for 2024-2025, according to research published in November by the Office for Students.
The headline data indicating supply shortages masks a more nuanced reality where some university towns and cities are starting to see a surfeit of space, according to Ward.
Still, there are early indications that US President Donald Trump's targeting of US universities could lead to an increase in interest from students applying to study in the UK.
'Several cities that were previously considered strong student markets from an investor's perspective are likely to continue to experience challenges in filling beds over the next few academic cycles,' Ward said.
'The UK higher education market remains an attractive proposition for international students, albeit the current financial difficulties faced by many institutions should be closely monitored.' BLOOMBERG
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