Richard Ward told a SHURE Initiative Zürich audience that U.K. supply and demand fundamentals are favorable from an investor's standpoint but adverse from a student's standpoint.

The Town Versus the Gown and Surging Postgrad Enrollment During COVID: Richard Ward Discusses U.K. Higher Education

February 5, 2024

SHURE Initiative

Richard Ward is Head of Research at U.K.-based StuRents

StuRents is the U.K.'s most prominent student accommodation ecosystem. We have three distinct arms of the business: We manage, the U.K.'s largest listings platform. We advertise over 750,000 beds across the U.K. in about 100 different locations. We're also a leading provider of property management software to both student and non-student industries, and to date, we've executed over 2 billion in tenancy value for our customers; we have our research and data offering as well, where we can leverage those platforms to provide highly granular data to the sector.

A Recap of the U.K. Student Accommodation Market

Understanding the current makeup of support pay in the U.K. sector is essential. What we've seen over the last few years, in particular, is that the volume of beds being managed by universities from a share of the market perspective has actually been in decline, and actually, the market is increasingly reliant on the private sector to provide beds to students. If we look at the supply pipeline, so the developments being proposed in the U.K., that is a trend that very much will continue, and we are expecting private PBSA, in particular, to continue to outgrow university-provided accommodation.

Just another quick trend to note in the U.K., despite obviously the U.K. being a relatively well-established market for the student population, there is still a fair amount of NIMBYism from locals, and almost this mentality of it's the town versus the gown. Local councils are only sometimes supportive of students, despite obviously the economic and cultural benefits they bring to university towns and cities.

Historical Changes to the Headline Supply

In the U.K., we've had a situation where the number of 18-year-olds in the population has declined. Having said that, demand and the number of students going to university have risen despite that reduction, partly because of a rising participation rate from 18-year-olds. At the same time, we've seen continued demand growth from international markets, particularly China.

That means that whilst we have had that decline in 18-year-olds in the U.K., the supply and demand fundamentals have been positive from an investor's standpoint and negative from a student's standpoint. The data shows this trend across the 20 largest locations in the U.K., outside of London. The demand growth has been outstripping supply growth.

In terms of what that means for the students, as basic economics would suggest, if demand is growing faster than supply, rents will continue to increase.

The Demand Side of the Equation in More Detail

The long-term trend across the U.K. has been very positive, and the number of students going to university has been steadily rising yearly because the U.K. is still very attractive from a student's perspective. We still have some of the best universities in the world, so there is a continued attractiveness of U.K. higher education. In terms of recent trends, what we've seen, particularly if we look back, during 2020 and 2021 when the pandemic arrived, was that postgraduate numbers grew rapidly. The number of postgraduates coming into U.K. higher education was up 15 percent year on year, so a significant jump, part of which can be attributed to the pandemic. At the time, the economic situation was a little bit uncertain, and the jobs market was uncertain, so for some it made sense to take a one-year postgraduate course perhaps whilst that uncertainty was there, and that is going to be one of the driving factors behind that postgrad growth.

Breaking Down the Demand Demographics

In 2021, we saw almost 15 percent year-on-year growth in the number of applicants from outside the E.U. However, post-Brexit, there was a significant decline in the number of students applying from the E.U.

For those not familiar, the reason for that is that post-Brexit, E.U. students essentially lost their home fee status for tuition fees, so it meant the cost of going to university in the U.K. for a European student dramatically increased essentially overnight.

Demand from China has steadily risen, and obviously, the U.K. is very attractive, even for overseas students. More recently, though, there's been significant growth in the number of Indian students, particularly postgraduate students coming to the U.K.


Summary comments from Richard Ward, Head of Research, U.K.-based StuRents at SHURE Initiative on 10 October in Zürich.

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