Niche market seen as secure investment

Jan 22 2008 by Aled Blake, Western Mail

THERE is a shortfall in student accommodation in South Wales university towns, a property survey claims.

More than three quarters of the estimated 38,000 students in full-time higher education in Cardiff and Swansea are competing for 9,000 beds in purpose-built halls of residence.

The report by international property consultancy King Sturge suggests that the UK student accommodation sector has moved from a niche property market to being regarded by financial institutions and investors as an asset class in its own right.

Transactions in the sector totalled more than £700m last year.

Student numbers continue to rise, with almost 1.43 million in full-time higher education in 2007, nearly 6% up on the year before.

And demand for quality student accommodation outstrips supply, with particular shortages in city centres, the report says.

As rents grow and the total value of the UK’s 450,000 purpose-built beds passes the £20bn mark, the report says investors have come to view the sector as being relatively secure and stable in the current economic uncertainty.

The Welsh capital has more than 25,000 students at Cardiff University and Uwic, with 6,500 university-provided beds, indicating that 74% cannot get university accommodation.

In Swansea, the figure is about 13,000 students competing for 2,900 beds.

In Cardiff, private-sector operators provide nearly 3,000 beds, with nearly 16,000 students in houses of multiple occupation or living at home.

Swansea’s private sector provides 93 bedrooms, while just over 10,000 students are in HMOs or at home.

Elizabeth Iles, of King Sturge’s Bristol-based student accommodation group, said, “The outlook for the sector remains positive, with more students choosing to participate in higher education.

“The development by the private sector of purpose-built accommodation continues where there is an imbalance in the supply of good quality accommodation.

“Given that the trend towards higher education shows no sign of slowing, there are many new development opportunities.”