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Shortfall in student spaces creates work

Student accommodation is running well below what is required in London despite a 90 per cent rise in construction in the past year, according to commercial property consultant Drivers Jonas Deloitte.

It has estimated there could be £165 million-worth of construction work in London, based on the number of schemes with planning consent and the assumption they will start on site next year.

Specialist developers are facing stringent planning policies, particularly in inner city boroughs, along with difficulty raising finance, despite growing demand for new accommodation.

Unite, the major player in the market, has calculated there are nearly 20,000 bed spaces in London that are under construction, have planning consent or are the subject of planning applications.

However, it predicts the eventual number supplied will be closer to 14,000 because of unviable schemes. Its strategy talks of investing £100m in development opportunities.

Despite this significant investment, the Drivers Jonas Deloitte third crane survey of student accommodation finds the gulf between the number of students and the supply of purpose-built bed spaces continues to widen.

This year, the report records 21 schemes under construction, compared with 11 last year, meaning the number of bed spaces under way has risen from 4,078 to 7,744.

Brent recorded the largest amount of construction activity with 1,095 bed spaces reported to be under way.

The analysis shows there are about 55,000 purpose-built student bed spaces in London - which cover just 20 per cent of the student population.

Unite says there are development opportunities for the foreseeable future, and it is set to increase its focus on London from 40 to 60 per cent of its business.

Unite acquisitions and developments director James Hunt said: “As the schemes come through the planning schedule the opportunity for contractors is pretty positive. There are quite a few sites that are consented.

“But while there are positives in the construction industry, there are considerable challenges in terms of how many [developers] can raise debt.”

He said: “We operate and manage the buildings ourselves, so we take a real interest in quality of the product; we need defect-free buildings and people with a good understanding of the sector, who ideally have worked with us previously.”

Mr Hunt said that with the customers being young people living away from home for the first time and the cyclical nature of the sector, it is vital that the product “stands the test of time”.

He added: “We have got to be ready for the September intake. It is really important that people can deliver on time. People have got to be thinking on our wave length and bid into it. While we want competitive prices, that’s not the be all and end all.”

He added that another problem for developers is that councils are expecting them to deliver affordable housing as a condition of the student work. Developers are looking around for boroughs where councils are not being so strict.

Unite estimates that it has 23 per cent of the student accommodation market share, trailed by IQ, Opal, Nido, Berkeley First and others.

Drivers Jonas Deloitte planning director Andrew Gale said bringing forward new student accommodation as part of mixed-use development, and partnering with universities to address concerns about need and student management, would improve the prospects of gaining planning permission, particularly in Southwark, Camden and Hammersmith & Fulham.

The theme is echoed across provincial cities, albeit on a smaller scale, said Patrick Finch, director of estates at the University of Bristol.

Many planned private sector schemes have not got off the ground in the city in the past couple of years, mainly through funding problems, he said.

 

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