Cushman & Wakefield RETHINKING: The Shape Of Real Estate 2040

Higher education student numbers continues to grow, driven by increases in the proportion of applicants accepted, the strong international appeal of UK universities, and the ongoing attraction of postgraduate study. Top tier institutions that are able to leverage their prestige globally have seen particularly strong growth, incentivised through the growing gap between uncapped tuition fees for international students and the capped fees for UK-domiciled students. Across the UK, the demand pool for student accommodation beds now stands at just under 1.5 million. The pace of student accommodation delivery has not kept up with student demand, and the national average student to bed ratio stands at 2.1:1 in 2023. With many students unable to access a purpose built student bed, this as well as wider economic factors has led to record levels of rental growth in many markets. The lack of purpose built student beds has a knock on impact to the wider housing market, with many students having to rent in the private rented sector, worsening the supply-demand imbalance for traditional renters.

Domestic student numbers are forecasted through population projections of 18-24 year olds across the UK, which is expected to peak in the mid-2030s as the UK’s ageing demographic becomes more prominent. The share of this group going to university is expected to remain constant at the current level of approximately 30% over the next 20 years as labour market pressures for degree qualifications are held in equilibrium with a push for apprenticeships and vocational qualifications. Projections for international-domiciled students are split into the Big Three (China, India and Nigeria) plus the remainder of Asia, and the rest of the world. Incoming student numbers from China seem to have plateaued, against a backdrop of a now declining wider population – although there may yet be further room for growth. Student numbers from India and Nigeria are continuing to boom. The latter two are expected to continue growing in the number of individuals coming to the UK to study until they reach the level where China is currently as a share of the total population, at which point we project student numbers will track population growth. The rest of Asia is also projected to follow this trajectory.

RETHINKING: THE SHAPE OF REAL ESTATE IN THE UK

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CUSHMAN & WAKEFIELD