Real estate developers are increasingly investing in the UK student housing sector despite declining international student numbers and financial pressures in higher education. In 2024, according to a report by a leading real estate group, private developers secured a record 22 land deals in the purpose-built student accommodation market, amounting to £473 million.  Some older-stye purpose build student stock is not sociable and students as customers prefer new purpose built accommodation, for example, cluster flats that offer some shared social spaces are preferred to single rooms on long corridors, also with private renal sector landlord exiting the market and HMOs (houses in multiple occupation) generally being low standard the investment continues to pour in.

Hotel or Office to Student Conversions:  Greystar and Cheyne Capital announce new student developments

These deals involve significant projects such as Greystar's redevelopment of an old hotel in Manchester into the 1,014-bed One Medlock Street. Dominus and Cheyne Capital are converting an office block at 65 Fleet Street into student flats in central London. This trend reflects a growing interest in student housing, driven by high rental yields and densely populated housing developments. 

Student housing contributes to the changing UK skyline

In recent years, privately developed student accommodation has reshaped the skylines of UK cities. These properties offer more amenities and higher rental prices than traditional student housing.

Although the number of international students has dropped following stricter visa regulations introduced by the previous Conservative government, the sector remains profitable due to rising rents and the high demand for student housing.   International students may well have come from newer cities than we have in the UK and therefore are much more used to high rise living.

Student rent rises in 2024

Official data indicates that private rents in the UK rose by 9 per cent in the year ending December 2024. Research conducted by the Higher Education Policy Institute in 2023 revealed that private-sector student flats in ten university cities experienced rent increases nearly double that of university-owned accommodations.

London student rents for 2024-2025

In London, the average rent for students reached £13,595 in the 2024-25 academic year, exceeding the maximum student loan available in the capital for the first time.  Private developers continue to capitalise on this demand, despite concerns about affordability. Privately managed student accommodations are generally more expensive than university-owned options.

This trend has sparked debate over the sustainability of relying on for-profit companies to provide student housing. Nonetheless, developers see continued growth potential due to the gap between supply and demand. 

Unite Student contnues to invest strongly in student accommodation

Unite Students, a leading developer in the sector, acquired a 444-bed site at Kings Place in Southwark, central London, as part of the 22 land deals. The company is exploring further opportunities, including purchasing existing university housing assets.  Unite’s leadership sees potential in leveraging private capital to support the higher education sector, which owns approximately £30 billion in real estate. They believe that gradually acquiring these assets over a decade could increase the housing supply and fund universities. 

Universities partner with private developers to get student housing built

Strategic partnerships between universities and private developers are also driving the expansion of privately developed student housing. These collaborations provide cost benefits and reduce developer risks by securing student tenants through university agreements.  For instance, Newcastle University partnered with Unite Students in a £250 million joint venture to create about 750 new beds for its students. 

This approach signifies a shift to integrated development models that blend public and private sector resources. Collaborating, universities and developers can provide quality student accommodation while tackling affordability. Such partnerships will likely grow as universities aim to increase housing capacity without major capital costs. 

Despite financial challenges and declining international student numbers, the UK student housing sector remains a strong investment opportunity. High rental yields, steady demand, and partnerships with universities drive this growth. Developers believe private investment will be crucial for future housing needs.

FAQs 

Why are real estate developers investing in student housing despite falling international student numbers?

Developers are attracted by high rental yields and the ongoing demand for student accommodation, which remains strong despite changing student demographics. 

How are developers addressing affordability concerns in student housing?

Developers are partnering with universities to reduce costs and secure student tenants, helping to manage rental prices while maintaining profitability. 

What impact does private investment have on the UK student housing market?

Private investment is reshaping the market by increasing the supply of modern, amenity-rich student housing, influencing rental prices and competition.