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UK student housing market faces oversupply amid Covid-19 crisis but Singapore private equity firm sees values in investment plan

  • Asset owners face short-term income pressures from weak demand due to Covid-19 restrictions but prices are holding up well, Knight Frank says
  • Singapore-based Q Investment Partners is seeking £30 million to buy assets in London, Bath and Edinburgh as long term plan

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Graduation day in University of Cambridge. The UK is the largest market for student housing assets outside North America. Photo: Shutterstock
Cheryl Arcibal
The market for student accommodation in the UK, the hottest market outside North America in recent years, is entering a lull period amid the Covid-19 crisis. Growing oversupply could stress prices in the near term, analysts said.
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The market has an estimated £1 billion (US$1.27 billion) of excess stock, according to property consultancy Knight Frank, mitigated by some construction delays due to a slump in demand as the pandemic kept students away at home and universities turned to online teaching.

“There are pressures building for operators,” said Tom Leahy, senior director for Europe, Middle East and Africa analytics at Real Capital Analytics (RCA). “Pricing trends in the listed sector do imply that we should see a fall in the direct market.”

The global restrictions on travel mean student accommodation providers who are most dependent on demand from overseas students are likely to be under greater stresses than other owners with a focus on the domestic market, he added.

UK student housing market is getting a boost from US investors.
UK student housing market is getting a boost from US investors.
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The UK is the second largest market for purpose-built student accommodation, according to Knight Frank. Rapid growth over the last decade means that the sector has expanded into a £65 billion pool after private equity firms and sovereign wealth funds waded into the asset class.

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