Investor interest pushes construction of new student accommodation to five-year high

Investment in student accommodation continued to grow last year, with the number of new units under construction hitting a new five-year high, and the combined value of projects exceeding £2.3bn.

Contracts to build more than 4,500 new student bedrooms were awarded in 2015, the highest annual amount in over five years, according to Barbour ABI, and investment in the student accommodation sector shows no sign of slowing down.

There was an overall increase of 26% in student bedrooms being commissioned for construction in 2015 compared to the previous year, according to the firm’s analysis. The peak of student housing construction came in the final quarter of 2015, as contracts were awarded to build 2,117 units, the highest total recorded since before the recession.

“Student housing has undergone a significant amount of change over recent years, with rising rental fees and a higher level of expectation from the occupying students,” said Michael Dall, Barbour ABI’s lead economist.

“Universities and investors are behind a wave of more modern accommodation, with Wi-Fi to en-suites now becoming the norm as they attempt to attract prospecting students with high end living facilities. A wave of post-graduate accommodation has also come into play and I expect this to continue in 2016, as the majority of investors focused on bridging the gap for first year housing prior to 2015.

“The removal of the cap on student numbers may have also triggered many universities to anticipate an increase in enrolment over the coming years, hence the jump in the number of new student bedrooms being commissioned in 2015. As investor appetite remains high for student housing, I expect it will be at the forefront for many contractors over the coming years.”

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