Real Estate for a changing world
UK STUDENT HOUSING
MARKET UPDATE Q1 2022
MARKET OVERVIEW
ϐ The first quarter, a beacon for the performance of
purpose-built student accommodation (PBSA), did not
fail to deliver this year.
ϐ Demand for the 22/23 academic year was robust with
610,720 applications meeting the January deadline, in-
line with 2021, and above the long-run average.
ϐ However the total masked varying trends between
applications from EU countries, which fell 19% compared
to Q1 2021, whilst application numbers from non-EU
countries was flat.
ϐ At closer inspection application data from some
international markets stood out. Specifically, demand
had increased from India and China, growing 10.7% and
12.1%, respectively. There was also a significant tick up
from all the Middle Eastern markets, including a 17.5%
increase from United Arab Emirates, whilst applications
from Nigeria increased 47%.
ϐ The growing number of applications reflects a targeted
approach by the UK government and Higher Education
institutions to offset the drop in EU applicants since
Brexit. London Economics reported that the net impact
of international students on the UK economy was
estimated to be £25.9bn (based on the 2018/19 cohort).
ϐ In July 2021 the UK launched its Graduate visa to attract
more international students, allowing students to live
and work in the UK for two years post-graduation. It is
likely this has helped to boost the attraction of UK higher
education and increased overseas demand.
ϐ Domestically there has also been sustained growth in
the number of 18 year olds applying to university. 43.4%
of all UK 18 year olds made an application to UK Higher
education meeting the January deadline.
ϐ However, the supply of accommodation is constrained in
many key UK towns and cities. The reduction in HMOs,
as a result of the tax and regulatory environment, is
putting more pressure on the PBSA market.
JANUARY DEADLINE APPLICANTS: EU VS. NON-EU
100,000
80,000
No. of applicants
60,000
40,000
20,000
0 evidence has resulted in little yield movement.
EU Non EU
Source: UCAS
ϐ Whilst 20,000 new beds were delivered in 2021, and
the pipeline in London and in other major university
cities, such as Nottingham, remain robust, planning
applications declined 64.1% compared with Q1 2021
(source: StuRents). The development pipeline is under
pressure from construction cost inflation and supply
chain disruption and this combined with the difficulty in
finding suitable sites, is slowing activity.
ϐ The difficulties in the construction sector was noted
in Unite’s latest results who also reported a strong
recovery in occupancy and forward reservations for the
22/23 academic year.
JANUARY DEADLINE APPLICANTS: UK 18 YEAR OLDS
340,000
320,000
No. of applicants
300,000
280,000
260,000
240,000
220,000
200,000
ACTIVITY DOMINATED BY PORTFOLIO SALES
Source: UCAS
ϐ The year kicked off with some strong investment activity
totalling £1.6bn, making it the most active first quarter
since 2015, aside from Q1 2020 which was boosted by
the iQ platform purchase for £4.7bn.
ϐ The majority of activity, 79%, was in portfolio purchases
which highlighted the continued confidence from
investors on the sector outlook.
ϐ The largest portfolio deal was between Tristan Capital
Partners and Brick Group for £400m as part of a joint
venture formation. Elsewhere, Greystar purchased
a portfolio from Downing for £388m and Lone Star
purchased an 11 asset portfolio from Unite for £306m.
ϐ Q1 also saw a new £1bn partnership form between
Urbanite Living and Prescient Capital to deliver 6,500
student beds over the next 3-5 years.
ϐ The lack of available standing stock for purchase reflects
the reluctance by investors to dispose of assets.
ϐ Sentiment in the sector has been buoyed by the
resilience demonstrated throughout the pandemic
however the low level of standing stock transactional
ϐ The counter-cyclical nature of PBSA should cushion
the sector in the high inflationary environment, and
combined with the good value on offer, investor interest
in the student market should be maintained.
www.realestate.bnpparibas.co.uk
KEY MARKET ACTIVITY Q1 2022
Investor City Details Type Date

Tristan Capital National A £400m asset sale as part of JV formation between Tristan Portfolio purchase Jan-22
Partners Capital Partners and Brick Group
Greystar National Purchase of four PBSA and one BTR assets for £388m from Portfolio purchase Jan-22
Downing
Lone Star National Purchase of 11 Unite PBSA assets, of 4,488 beds, for £306m Portfolio purchase Mar-22

Pension Insurance London £129m forward fund of London School of Economics PBSA, to Forward-funding Jan-22
Corporation completed 2024
Aviva Investors Bath Purchase of 461 beds and 27-year lease agreement with Asset purchase Feb-22
University of Bath, for £82m

INVESTMENT VOLUMES 2019 - Q1 2022 YIELDS

Q1 Q1 Sentiment
7 2021 2022
6 London (Zones 1 & 2) (Lease) 3.50% 3.50% ◆
5 London (Zones 1 & 2) (Nomination) 4.00% 4.00% ◆
4
London (Zones 1 & 2) (Direct-Let) 4.00% 4.00% ◆
£bn

3
Super Prime Regional (Direct-Let) 5.50% 5.25% ◆
2
1 Prime Regional (Direct-Let) 5.75% 5.50% ◆
0
2019 2020 2021 2022 Secondary Regional (Direct-Let) 7.25% 7.25% ◆
Q1 Q2 Q3 Q4 Other/Tertiary Regional (Direct-Let) 8.25% 8.25% ◆
Source: BNPPRE

CONTACTS
Lindsey Lock
Simon Williams Alanna Peach
Senior Director
Executive Director Director
020 7338 4270
020 7338 4151 020 7484 8121
07879 608 830
07808 479 304 07458 129 370
lindsey.lock@bnpparibas.com
simon-d.williams@bnpparibas.com alanna.peach@bnpparibas.com

Rebecca Shafran Nick Robinson

Senior Associate Director Senior Associate Director
020 7338 4299 020 7338 1016
07818 539 195 07557 288 213
rebecca.shafran@bnpparibas.com nick.robinson@bnpparibas.com

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