While the 2017 intake of university students should be settling into their term-time residences, demand for student accommodation with increased amenities is continuing to grow across the country fuelled by overseas and postgraduate students, says an expert in the field.
Property and cost consultancy, Thomas & Adamson, has seen a marked increase in revenue this year from the student accommodation sector in line with expected growth in the sector, according to partner and student accommodation specialist at Thomas & Adamson, Brian Donaldson:
“Over the course of the year we have seen a ten per cent increase in student accommodation projects going to site, which confirmed our projections. In addition, we are finding the number of clients looking at student accommodation as the catalyst for development of their existing sites is also continuing. This is borne out by recent studies suggesting around ten per cent of all commercial property investment is directed through student accommodation.”
Thomas & Adamson is currently working with clients building property to house both overseas and postgraduate students, as well as clients who are working directly with universities for the undergraduate market.
Michael Beverley, director at Thomas & Adamson explained there is now a demand for the provision of more amenity space in the direct let market.
“With the undergraduate market the target cluster size is between six and eight bedrooms to optimise social interaction. Fewer than six and more than eight can cause issues such as a lack of social inclusion, isolation and taking ownership of the flat the students are living in. For postgraduate and overseas students, studios are popular, with amenity space significantly increased and expectation of dining rooms, cinemas, gyms as well as the more familiar common rooms and study spaces.”
Adding that the student accommodation sector is a mature market, Beverley explained:
“Clients and operators are fully aware what’s required for customer types, what works in certain cities and what their customer demands will be,” he said.
Brian Donaldson added:
“The studio and cluster mix is a key factor in any development. Studios sell at a higher rate therefore command a better investment return. However, with more studios there is a need for more amenity space which does not generate a direct investment return. This can mean the Gross Internal Floor Area is larger for a mainly-studio development increasing the build cost per square metre.”
The majority of schemes Thomas & Adamson is currently involved in new-build student accommodation. Michael Beverley said:
“There was previously an increased level of activity in the conversion of office blocks to student accommodation, however, this market seems to have cooled.”
However, overall Donaldson claimed the cost of building in the sector has continued to rise over recent years. He said:
“The days of new-build student accommodation between £40,000–£45,000 have for the most part gone.
“Construction costs for new-builds are ranging between £50,000-£65,000 per bed, excluding more high-end studio products for overseas and postgraduate students. For conversion of existing properties to student accommodation, the costs are generally between £50,000–£55,000 per bed.”