Birmingham facing student accommodation shortage
Demand for purpose-built student accommodation (PBSA) in Birmingham is outstripping supply, with a shortfall of more than 12,000 beds, according to research by CBRE.
The real estate advisor analysed the latest available supply and demand data across the UK’s 30 largest university towns and cities, with the results showing a total shortage of more than 350,000 student beds.
In Birmingham, demand for PBSA beds currently stands at 43,570. However, with an existing supply of 25,052, including private and university owned accommodation, and a pipeline of just 6,324 beds, the city is facing a shortage of 12,193.
It is a similar picture across the Midlands, with Nottingham, Coventry, Leicester and Loughborough all experiencing PBSA supply and demand imbalances. Nottingham has the largest shortage of beds at 19,799 followed by Coventry (6,677), Loughborough (5,471) and Leicester (3,744).
Birmingham is the largest regional university town with more than 84,000 full-time students studying at the city’s nine universities. The city is home to around 8,000 more full-time students than Glasgow and circa 10,000 more than Manchester. Both Aston University and Birmingham City University have more than doubled their intake over the last ten years, with the University of Birmingham seeing a circa 30% rise in numbers.
Raj Bains, director in CBRE’s student accommodation valuation and advisory team, said: “Although PBSA is the preferred mode of accommodation for Birmingham’s students, many are unable to access it. The pipeline of circa 6,300 beds will help all alleviate some of the supply pressure, but it’s still only half of what’s required to meet the current demand.
“The gap we’re seeing between supply and need for PBSA highlights the mismatch between the pace of delivery and growth in the student population and the chronic need for accommodation. There’s real opportunity across Birmingham and the wider Midlands region for landowners, developers and investors in PBSA to strike while the iron’s hot and take advantage of the favourable market conditions.”
According to CBRE’s Student Index, total returns for PBSA for the year ending September 2022 exceeded 16%. At 11.3%, growth in capital value was also stronger than the previous year, with larger assets of 500+ beds reporting the best growth. This performance saw PBSA enjoying higher total returns and higher capital value growth compared with ‘all commercial property’ in the year to Q3 2022.
Bains said: “Although yields softened last year – with even prime regional benchmarks moving out by 25bps – the unprecedented rental growth prospects in key markets are providing a cushion.
“The changes to EPC requirements and new requirements placed on property owners under the Building Safety Act could see some delays in deals completing. However, overall, the outlook for the most popular UK markets remains strong and lenders continue to remain keen on the living sectors, including PBSA.”
