Student rental market ‘fundamentals’ remain despite rent strikes and closed campuses, it is claimed

Property giant Cushman & Wakefield admits student rental market faces huge challenges at the moment but says it still offers a long-term investment opportunity.

Global property agent Cushman & Wakefield is bullish about the UK’s student accommodation sector, despite gloomy predictions for the next academic year.

It’s just completed deals on two student accommodation blocks in Leicester and Edinburgh for £22 million; Dover Street in Leicester has 135 bed spaces while Goods Corner in Edinburgh (pictured) has 108 studio bed spaces. It says both properties have been 100% let with strong bookings for the 2020/21 academic year.

However, London Economics research suggests that more than 230,000 fewer students will enter higher education as a result of the crisis, over half of which are international students.

That fall in student numbers would translate into a drop in income of around £1.51bn from non-EU students, £350m from EU students and £612m from UK students opting to stay away.

Lost revenue

Universities UK, the representative organisation for the UK’s universities, has also reported that institutions will suffer an estimated £790m in lost revenue in the 2019/20 academic year. Cushman & Wakefield’s student accommodation advisory team says about 44% of this figure was due to accommodation rebates.

Russell Hefferan, partner in Cushman & Wakefield’s student accommodation capital markets team, says: “Whilst in the immediate term COVID-19 presents obvious challenges for the industry, this transaction provides an excellent example of the strong, long-term fundamentals student accommodation offers.

“Overall, in the UK there is a healthy amount of student applications, with overseas numbers ahead of 2019 according to UCAS. From 2021 there is also going to be a continued increase in the number of UK 18 year olds coming through the system. The demand and supply dynamics remain positive for the sector and it is in good shape to weather the storm.”

Homes for Students will manage and operate both blocks.

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