Purpose build student schemes to surge again

Key highlights: 

• Student accommodation developer Unite is increasing its development program, predicting further growth in demand over the next 10 years.
• A decline in Houses in Multiple Occupancy (HMO) due to reforms and mortgage costs has benefited purpose-built student accommodation (PBSA). 
• Unite CEO Joe Lister says there are strong opportunities for PBSA growth in coming years. 
• Unite has a record £1.3 billion development pipeline focused on top university markets.
• It includes £569 million committed developments in Russell Group cities. 
• Unite also agreed to a £250 million joint venture with Newcastle University this month.
• Additionally, Unite is targeting £50-75 million annual spending on refurbishment projects.
• Lister cites an 8% drop in England’s HMO beds, higher PBSA construction costs, and aging university accommodations as increasing demand.
• The £452 million uncommitted future pipeline includes 2,373 new beds across key projects.

News in more detail:

Bristol, UK – February 22, 2024 – Student accommodation developer Unite Students has announced plans to expand its development program, predicting strong continued growth in demand for purpose-built student accommodation (PBSA) over the next decade. 

In its latest earnings report, Unite revealed it has built a record £1.3 billion PBSA development pipeline focused on leading university cities and the Russell Group. It includes £569 million of committed developments across Russell Group markets and a recently agreed £250 million joint venture with Newcastle University to deliver new student housing.

Unite CEO Joe Lister stated that a decline in Houses in Multiple Occupancy (HMOs) supply has benefited PBSA demand. Lister cited an 8% reduction of over 100,000 HMO beds in England since 2021 as private landlords exit the sector due to tighter regulations and higher mortgage costs.

Lister remarked: “New supply of PBSA is also down 60% on pre-pandemic levels, reflecting planning backlogs and viability challenges created by higher costs of construction and funding. Obsolescence of older university accommodation is also expected to increase due to building age and the need to operate buildings more sustainably.”

“The combination of these factors has significantly increased demand for our accommodation in many cities, and we expect this supply challenge to continue for a number of years,” he added.

In addition to its £1.3 billion committed pipeline, Unite has assembled a further £452 million of future PBSA projects under development. It includes plans for 2,373 new beds across key schemes. 

Unite is also budgeting £50-75 million spending annually on refurbishing existing student housing properties. 

Lister stated that Unite is tracking more PBSA opportunities “at attractive returns”, which it aims to secure over the next 6-12 months to continue growing its development portfolio.

News Summary:

Student housing developer Unite Students is expanding its development program for purpose-built accommodations, predicting strong ongoing growth in demand. Unite currently has a record £1.3 billion pipeline and plans to add over £450 million more in key student cities. The company cites factors like declining HMO supply and increased PBSA costs as driving demand growth. Unite aims to secure additional opportunities over the next year to boost its portfolio amid surging interest.