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Higher Education and Student Accommodation Construction Sector Report - UK 2016-2020 Analysis

Published: 29/03/2016 / Number of Pages: 77 / Price: £795.00

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Introduction and Overview

The 6th edition of the 'Higher Education and Student Accommodation Market Report - UK 2016-2020 Analysis' identifies construction activity in this growing sector and reviews capital funding, maintenance issues, demand/supply of student accommodation, key contractors and consortia in both the universities/colleges and student accommodation sectors.

Key sections covered:

  • Review of university capital funding - budgets, plans, key universities, alternative funding sources.
  • Detailed analysis of types of accommodation within the student housing market - including current supply in university halls, commercial and private accommodation.
  • Key potential growth areas.
  • Key operators, contractors/consortia.

Key areas of insight include:

  • Impact of higher tuition fees - demand for places / student accommodation, review of ownership and maintenance requirements of student halls - alternative funding options for universities upgrading residential/non-residential facilities etc.
  • Review of capital funding in HE system, university capital building programmes.
  • Supply-demand imbalance of purpose built student accommodation (PBSA) driven by rising student numbers - problems of under-supply in many university towns - shift in balance towards higher standards of accommodation.
  • Analysis of university estate and infrastructure backlog, and overview of leading construction contractors operating in the higher education sector.
  • Partnership models between investors, developers and operators of PBSA with universities to upgrade/replace existing stock. Growth of private sector to upgrade and develop accommodation - transfer of ownership / outsourcing functions to the private sector.
  • Market shares, portfolios and future development pipelines of key 25 commercial operators and investment funds in PBSA market - new market entrants.
  • Analysis of developer activity within PBSA market including current supply of accommodation, factors affecting market and forecasts of future PBSA development pipeline, key growth opportunities.

Some of the companies included:

Balfour Beatty, BAM Construction, Bowmer and Kirkland, Bouygues UK, Collegiate AC, Galliford Try, Graham Construction, Henry Brothers, Interserve Construction, ISG, Kier, Laing O'Rourke, Lakesmere Group, Liberty Living, MACE, McLaughlin & Harvey, Morgan Sindall, Osborne, Pochin's, Pure Student Living, Sir Robert McAlpine, Student Housing Company, UNITE, UPP, Urbanest, Vinci Construction UK, Vita Student, Wates Construction, Watkin Jones, Willmott Dixon.

Overview of UK Higher Education Sector

  • Brief overview of higher education system in the UK including types of University and the impact of new universities on infrastructure development.
  • Growth in student numbers 2008-15, recent trends/future prospects, increase of overseas students, impact of higher tuition fees - numbers still rising.
  • Value of total university funding in the UK to 2015/16 - Higher Education Funding for England, Wales and Scotland to 2015.
  • Overview of higher education capital investment to 2014-15, Capital grants up to 2014 - total and for top 10 universities in England and Scotland.
  • Impact of funding cuts on university infrastructure development - alternative funding sources, review of ownership and maintenance requirements of their student halls. Other sources of income - Charitable Trusts, Endowment Funds, Bond Markets.

Higher Education Construction Activity & Key Contractors

  • Analysis of construction output in the higher education sector.
  • HE Capital Spending, top 15 University capital grants 2015/16.
  • University Estate - Top 40 universities - number of buildings, floor area, capital expenditure - all split by residential and non-residential.
  • Examples of university capital building programmes, impact of spending cuts, procurement of capital building projects in the HE sector - partnerships, University Enterprise Zones.
  • Higher Education / Student Accommodation Contractors and Consortia - Top 20 key players, projects/pipelines in 2015, sector experience etc.

Overview of UK Student Accommodation Market

  • Mix of student accommodation - bedspaces 2010-2020, mix by type 2015/16 - university owned/operated, commercial / PBSA halls, private shared houses. Current supply of student accommodation at leading UK universities including share/volume mix of types of accommodation - average rents, outsourcing etc.
  • Impact of rising student numbers /international students (a key market) on university accommodation -demand continues to grow and outstrip supply.
  • Regional analysis of student accommodation market - level of provision at Top 30 universities, share taken by PBSA, opportunities, key growth areas etc.
  • London student accommodation market - rising student numbers and planning restrictions affecting development activity in some central areas, development pipeline. Key players.
  • Factors affecting student accommodation market - impact of rising student rents, overseas students, switch to higher spec. accommodation, student accommodation investment funds.
  • Market shares of leading 35 commercial operators of accommodation including developers, housing associations etc - analysis of portfolios and forward development pipelines.
  • Leading investment funds - key players - portfolios, fund values, impact on market.
  • Future supply 2016-18, analysis of future PBSA development pipeline both in London and nationally, market prospects, key growth areas, new market entrants.

Report Summary

Despite the increase in tuition fees, student numbers continue to expand in the higher education sector placing great pressure on university teaching, research and residential infrastructure, and there is now a considerable need to address past under-investment and provide additional space for teaching, research and student accommodation. Despite the severity of budget cuts which have hit many universities' finances, many are still going ahead with projects as planned, with developments planned across the whole estate and ongoing backlog of refurbishments and upgrades boosting the higher education construction pipeline. The latest HEFCE financial forecasts show that the sector is planning on delivering a substantial increase in capital investment over the period 2014-15 to 2017-18. However, the continued cuts in government funding to the HE sector has meant that most HEIs have had to review the ownership and maintenance requirements of their estates and consider various outsourcing options. This has led to an increase in partnerships between universities and private sector developers and investors, especially in the student accommodation sector.

The expansion in the number of students has led to increased pressure on university residential accommodation, requiring universities to invest in developing student residences to cope with the growing student numbers. Decent accommodation is a key part in universities' marketing strategy to attract new students, but there is an acute undersupply of student accommodation in many regions. Over the past few years there has been a dramatic change in the balance of supply between institutional and private providers - in 2016 over 46% is accounted for by private providers - and a large portion of the shortfall in university owned accommodation will continue to be met by commercial providers. The purpose built student accommodation (PBSA) market represents one of the fastest growing sectors in the property market and has emerged as a key investment sector over the past decade, attracting £5bn of investment from developers, investors and private operators in 2015.

While a number of PBSA providers are now creating 'high end' accommodation to attract overseas and the wealthiest students, many cannot afford this type of accommodation. Over recent years, there has been a marked shift in the type and range of PBSA, with commercial operators focusing on the development of more expensive accommodation, most notably premium cost studio flats, with some offering luxury accommodation, as standard, also coming onto the market. There has been a continued decline of affordable accommodation, particularly self-catered non-ensuite rooms in cluster flats, and this represents a particular challenge.

In 2016/17, the outlook for the student accommodation sector remains positive, with student numbers expected to increase with the removal of the cap on student numbers. This is likely to benefit mid-high ranking universities, with developers targeting universities with large student populations such as Portsmouth, Aberdeen, Liverpool and Coventry, and is also expected to trigger rapid growth in the number of overseas students coming to the UK. Despite higher tuition fees and the prospect of higher levels of student debt, the UK PBSA sector remains heavily over-subscribed and new development of halls has so far not kept pace with the growth in student numbers. The market remains characterised by acute undersupply in many of the major university towns across the UK and growing student numbers ensuring that the pipeline of new developments will remain buoyant over the coming years.


List of Report Contents

  1. Contents Listing
  2. 1. INTRODUCTION 6
  3. 2. SUMMARY AND FUTURE PROSPECTS 7
  4. 3. OVERVIEW OF HIGHER EDUCATION IN THE UK 11
  5. 3.1 OVERVIEW OF UNIVERSITIES IN THE UK 11
  6. 3.1.1 Rise of the 'New Universities' 11
  7. 3.1.2 Role of Private Providers in the HE Sector 11
  8. 3.2 STUDENT GROWTH 12
  9. 3.2.1 Applications 12
  10. 3.2.2 Overseas Students 13
  11. 3.3 TUITION FEES 14
  12. 3.3.1 Impact of Tuition Fee Rises on Student Numbers 16
  13. 3.4 HIGHER EDUCATION GREEN PAPER 2015 16
  14. 4. HIGHER EDUCATION SPENDING AND INVESTMENT 18
  15. 4.1 FUNDING STRUCTURES 18
  16. 4.2 HEFCE FUNDING FOR ENGLAND 20
  17. 4.3 SFC FUNDING FOR SCOTLAND 21
  18. 4.4 HEFCW FUNDING FOR WALES 23
  19. 4.5 ENDOWMENT FUNDS 24
  20. 4.5.1 Bond Markets 24
  21. 5. CONSTRUCTION ACTIVITY IN THE HIGHER EDUCATION SECTOR 26
  22. 5.1 TOTAL CONSTRUCTION OUTPUT 26
  23. 5.1.1 Construction New Work - Value of Non-Domestic Output to 2020 26
  24. 5.1.2 Construction Output by Sector to 2020 27
  25. 5.2 HIGHER EDUCATION CONSTRUCTION OUTPUT 30
  26. 5.3 HIGHER EDUCATION CAPITAL EXPENDITURE 32
  27. 5.3.1 England 32
  28. 5.3.2 Scotland 33
  29. 5.3.3 Wales 34
  30. 5.4 UNIVERSITY ESTATES CAPITAL EXPENDITURE 34
  31. 5.5 UNIVERSITY/STUDENT ACCOMMODATION CAPITAL BUILDING PROGRAMMES 38
  32. 5.5.1 Overview 38
  33. 5.5.2 Procurement of University Construction Work 39
  34. 5.5.3 Partnership with Private Sector Businesses 41
  35. 5.5.4 University Capital Plans 43
  36. 5.6 CONSTRUCTION SUPPLY IN THE HIGHER EDUCATION SECTOR 46
  37. 5.6.1 Contractor Activity in the HE Sector in 2015 47
  38. 6. THE STUDENT ACCOMMODATION MARKET 53
  39. 6.1 OVERVIEW 53
  40. 6.2 PROVISION OF STUDENT ACCOMMODATION 54
  41. 6.2.1 Regional Provision of Student Accommodation 55
  42. 6.2.2 Student Accommodation Market in London 57
  43. 6.3 TYPES OF STUDENT ACCOMMODATION 58
  44. 6.3.1 University Halls 58
  45. 6.3.2 Commercially Operated Halls 62
  46. 6.4 FACTORS AFFECTING THE MARKET 65
  47. 6.4.1 Student Rents 65
  48. 6.4.2 Student Accommodation Investment Funds 68
  49. 6.4.3 Planning Issues and Community Infrastructure Levies (CIL) 69
  50. 6.4.4 Use of Offsite Construction in the PBSA Market 70
  51. 6.5 KEY DRIVERS OF THE STUDENT ACCOMMODATION MARKET 72
  52. 6.5.1 Student Accommodation Development Pipeline 72
  53. 6.5.2 London PBSA Development Pipeline 73
  54. 6.5.3 Forecast UK Development Pipeline 74
  55. 6.5.4 Outlook for the Student Accommodation Market 75
  1. Tables & Charts
  2. CHART 1 STUDENT BED-SPACES BY OWNERSHIP TYPE 2016 (%) - UNIVERSITY / COMMERCIALLY MANAGED HALLS 7
  3. CHART 2 HEI APPLICATIONS 2011-2015 (UK & OVERSEAS APPLICANTS) 13
  4. CHART 3 2015 OVERSEAS APPLICANTS TO UK UNIVERSITIES BY COUNTRY OF ORIGIN 14
  5. TABLE 4 ANNUAL TUITION FEES IN THE UK BY COUNTRY 2015-16 15
  6. CHART 5 SOURCES OF UK HIGHER EDUCATION FINANCE - INCOME 2014-15 18
  7. TABLE 6 HEFCE FORECASTS FOR HIGHER EDUCATION SECTOR INCOME LEVELS IN ENGLAND - 2015-2018 (£M) - BY INCOME SOURCE 19
  8. TABLE 7 HEFCE GRANT FOR FINANCIAL YEARS 2011-12 TO 2015-16 (£M) 20
  9. TABLE 8 HEFCE FUNDING 2015-16 - TOP 15 UNIVERSITIES BY SIZE OF GRANT 21
  10. TABLE 9 SFC GRANT FOR FINANCIAL YEARS 2011-12 TO 2015-16 (£M) 21
  11. TABLE 10 SFC SCOTLAND FUNDING 2015-16 - TOP 15 UNIVERSITIES 22
  12. TABLE 11 SFC SCOTLAND INDICATIVE RESEARCH EXCELLENCE GRANT - FUNDING BY UNIVERSITY 2016-2018 (£M) 23
  13. TABLE 12 TOP 15 UK UNIVERSITY ENDOWMENT FUNDS 2014-15 (£M) 24
  14. CHART 13 VALUE OF NON-DOMESTIC CONSTRUCTION OUTPUT 2010 - 2020 BY VALUE (£BN AT CURRENT PRICES) 26
  15. CHART 14 VALUE OF CONSTRUCTION OUTPUT NEW WORK BY SECTOR - % BY VALUE 2015 28
  16. TABLE 15 CONTRACTORS OUTPUT IN PUBLIC SECTOR UNIVERSITY CONSTRUCTION WORK 2010-2020 (£M) 31
  17. TABLE 16 TOP CAPITAL ALLOCATIONS TO HIGHER EDUCATION INSTITUTIONS 2015-16 (£M) 33
  18. TABLE 17 SFC SCOTLAND CAPITAL FUNDING 2015-16 - TOP 15 UNIVERSITIES 34
  19. TABLE 18 ESTATE MANAGEMENT DATA BY INSTITUTION (NON-RESIDENTIAL/RESIDENTIAL) - GIFA, CAPITAL EXPENDITURE ETC. 2013-14 36
  20. CHART 19 AGE OF NON-RESIDENTIAL UNIVERSITY ESTATE 2014-15 37
  21. TABLE 20 UNIVERSITY ENTERPRISE ZONES IN THE UK - SUMMARY - PARTNERSHIP STRUCTURES, FUNDING, SECTOR FOCUS. 42
  22. TABLE 21 UNIVERSITIES SECTOR ANALYSIS - TOP CONTRACTORS BY VALUE OF PROJECTS (£M) & PROJECT EXPERIENCE 2014-15 51
  23. CHART 22 TYPES OF STUDENT ACCOMMODATION IN THE UK - APPROXIMATE SHARE BY TYPE 2015-16 54
  24. TABLE 23 REGIONAL STUDENT ACCOMMODATION PROVISION 2015-16 - 25 MAJOR UNIVERSITIES -SPLIT BY HALLS/PRIVATE. 56
  25. TABLE 24 REGIONAL PROVISION OF STUDENT ACCOMMODATION AT MAJOR UK UNIVERSITIES 2015-16 - NO. OF BEDS/% IN UNIVERSITY ACCOMMODATION 59
  26. TABLE 25 ON CAMPUS STUDENT ACCOMMODATION PROJECTS IN PIPELINE 2016 - VALUE, NO. OF BEDS, STATUS, PROJECT DEADLINE. 61
  27. TABLE 26 MARKET SHARES OF LEADING COMMERCIAL OPERATORS OF STUDENT ACCOMMODATION IN THE UK 2015-16 63
  28. TABLE 27 AVERAGE WEEKLY RENTS FOR STUDENT ACCOMMODATION IN THE UK 2014-15 AND 2015-16 BY REGION AND PROVIDER 66
  29. TABLE 28 AVERAGE WEEKLY RENTS FOR STUDENT ACCOMMODATION IN THE UK 2014-15 AND 2015-16 BY TYPE OF ACCOMMODATION 67
  30. TABLE 29 MAJOR STUDENT ACCOMMODATION INVESTMENT FUND DEALS IN 2015-16 68
  31. TABLE 30 TOP COMMUNITY INFRASTRUCTURE LEVY (CIL) RATES FOR STUDENT ACCOMMODATION DEVELOPMENT BY LONDON BOROUGH/REGIONAL CENTRE 70
  32. CHART 31 FORWARD PIPELINE OF STUDENT BED-SPACES BY OPERATOR 2016-2019 72
  33. CHART 32 ESTIMATED NUMBER OF NEW STUDENT BED SPACES BUILT PER YEAR - 2010-2020 74

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