Positive outlook for purpose-built student accommodation – Knight Frank

Knight Frank says that rising demand for university places points to a positive outlook for UK PBSA

Analysing UCAS’s latest data on student numbers, global property consultancy Knight Frank said that it “makes for positive reading, despite the pandemic”.

More than 728,000 students applied to start a full-time undergraduate course at UK universities in the 2020/21 academic year – nearly 22,500 more applicants than the previous year and only the second year-on-year increase in applications in the last five years.

There was also an increase in the number of applications from outside the UK, which climbed 7.5% compared to 2019 levels.

Higher application volumes supported a rise in total acceptances, with the number of students enrolling on a university course up by 5.4%.

Matthew Bowen, Head of Residential Investment Research at Knight Frank, said:

“The data suggests that initial fears of a sharp decline in enrolment – particularly from overseas as a result of campus closures – have not transpired. It also supports the principle that student numbers typically increase in times of economic downturn as some applicants take the opportunity to retrain or upskill.”

Understanding application and enrolment trends is of vital importance for the student accommodation sector, given the implications these factors have on both current and future demand.

Indeed, Knight Frank’s analysis of the data highlighted stark differences in demand for places at universities in different cities, and across different groups and tiers of universities as the Higher Education market becomes increasingly competitive.

Continuing a trend which has been evident since 2012, Knight Frank said that enrolment across higher tariff universities – which typically demand higher exam grades for entry – was up 13.2%. By comparison, medium and lower tariff universities saw acceptances increase by 3.7% and 1.1% respectively.

“While student numbers at lower tariff universities have remained flat since 2012, higher tariff institutions have seen numbers swell by 25% as students prioritise access to the higher quality courses available to them,” added Bowen.

“While demand for UK higher education remains robust overall, the fallout from a highly competitive enrolment process may create challenges in some markets if universities are unable to build their numbers back up.”

According to Knight Frank, there are early indicators that student demand will rise again for the 2021/22 academic year, with January deadline data from UCAS pointing towards an 8.4% increase in applications compared with the previous cycle.

This rise is highest comparable year-on-year increase since 2010, and was driven predominantly by an increase in UK applications, which are 11.6% higher than last year. This rise coincides with an increase in the 18 year old population in the UK – the first time in six academic cycles where this has been the case.

Assuming current levels of participation continue, this will drive domestic demand, with UCAS predicting it will result in 90,000 additional UK applications by 2025.

Looking beyond the UK, applications from outside the EU increased by 17.1%, driven by strong demand from the usual recruitment markets such as China (+21.5%) and India (+25.5%). Applications from within the EU were down by almost 40%, a factor that is likely a result of changes to fees in the wake of Brexit.

Bowen concluded: “Overall, this has resulted in a slight downturn in international student applications at this stage, though overall growth in UK-domiciled applications and prospective students from outside the EU gives much reason to be optimistic in the medium term.”


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