Half of new student accommodation built in just three UK cities

Nearly half of all new UK student accommodation built for this year was located in just three English cities as developers focus on “premium” locations, according to a new report.

Real estate firm Cushman and Wakefield’s annual report warned that the economic viability of building purpose-built student accommodation (PBSA) has come under scrutiny amid “pockets of underoccupancy”.

The UK market is still being affected by a fall in international student demand from visa restrictions, as well as affordability issues, it says.

Researchers said that rising costs of living and higher rents mean accommodation now consumes a record proportion of the average maintenance loan. In addition, a record 23 per cent of beds in England, including London, now cost over the maximum maintenance loan.

The least-occupied en-suite developments this year cost 110 per cent of the maximum maintenance loan.

Cushman and Wakefield found that 18,200 new beds entered the market in 2024-25 – 10,000 more than the year before.

But this was well below pre-pandemic levels and means that just 88,000 beds were delivered in the past five years, compared with 158,000 in the previous five years.

The new beds were also unevenly distributed across the country, with almost half of them in just three cities – London (3,775), Nottingham (2,593) and Leeds (1,979).

Nottingham has increased as a PBSA market by 35 per cent in the last five years to become the second largest in the UK, while the capital has exceeded the London Plan’s 3,500 beds-per-year target the first time since its introduction.

In contrast, demand has fallen significantly in Sheffield in the past two years – from a rate of about 1.5 students per bed to only 1.2. The firm said this was “unprecedented” in a major market and resulted in the largest decrease in PBSA rents in the UK.

David Feeney, partner in Cushman and Wakefield’s UK student accommodation team, said developers are focusing on a limited number of “premium” locations because of viability issues and risk aversion.

Their analysis shows that the “arms race” of recent years is over, with student-to-bed ratios set to fall in half of the 14 largest locations over coming years.

“Whilst markets don’t like uncertainty, investors still see huge opportunity in a number of undersupplied locations across the pricing spectrum, provided value for money and a good student experience is delivered,” added Feeney.

The report also found university rental growth (4.4 per cent) outpaced the private sector (1.2 per cent) for the first time in seven years.

patrick.jack@timeshighereducation.com