PLMR’s Sara Ghaffari takes a look at the student accommodation sector’s resilience following the UK’s vote to leave the European Union.
The Brexit vote has had, and will continue to have, significant implications across all construction and development sectors, including higher education. However, despite fears that Brexit will limit the number of EU-students or foreign students in the UK, developers should be assured that, the student housing market will continue to provide a robust and lucrative business model for the sector.
Here are the reasons why:
1. Student accommodation remains a low risk market
Every year demand for university places from domestic students significantly outstrips supply, with around 180,000 applications being rejected annually. EU students represent only six per cent of all full-time students in the UK (130,000), so even if the number of new students from European neighbours were to decrease, there would remain a high demand for those places amongst UK students. Whilst UK universities continue to fill their student places, students will require accommodation – the outlook looks positive.
2. Universities want to keep foreign students
Income from international students is the biggest source of revenue growth for UK universities – forecast to reach £ £4.6bn in 2018. This funding is vital to the prosperity of the UK’s academic institutions and the research they produce. With fears that EU funding streams may dry up, universities aren’t going to let foreign students leave easily.
3. Government is aware of the importance of protecting higher education
Whilst rhetoric towards foreign students has reflected the government’s hard immigration position, the government continues to spend millions on promoting the UK’s higher education expertise to foreign markets. The sector is a significant part of the UK’s export economy, generating £73bn in export earnings and supporting around 757,000 jobs, and as a result the government will seek to preserve the UK’s leadership and influence in academia and research.
4. Demand for purpose-built accommodation remains high
Many university towns and cities – Oxford being a prime example – remain under-provided in student accommodation. Students expect a higher standard of accommodation than in the past, and for many the old model of HMOs doesn’t cut it any more, particularly when rents can be exorbitant. Universities also want to see high quality accommodation close to their campuses, as this helps make their offer all the more enticing.
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