Manchester’s chronic lack of student beds entices investors
A significant shortfall in the delivery of purpose-built student accommodation in the city, coupled with surging demand, has created “one of the most sought-after real estate markets in the UK”, according to a report from CBRE.
In Manchester, just 4,745 student beds have been delivered since 2018. In that same time frame, demand for beds has grown by 8,100 spaces.
This imbalance makes Manchester one of the most undersupplied major university cities outside of London, according to CBRE.
The consultancy said local planning policy is to blame for a lack of PBSA delivery in Manchester, which has “enforced an effective moratorium on development” of the asset class.
In recent times, the city council has refused three student schemes that it claimed were contrary to Policy H12 – the policy that sets out how and where PBSA should come forward in the city.
These included Fusion’s 534-home project at Deansgate South, which was approved at appeal, and Watkin Jones’s 425 scheme in Fallowfield, which was not.
Manchester now has an identified shortage of 23,186 beds within the city, according to CBRE.
In recent weeks Manchester has opened the door on PBSA somewhat, approving several large schemes, including Vita’s 600-bed House of Social and IQ’s 1,220-bed Echo Street scheme.
The city council has identified a 12,500-bed pipeline and recognises it needs to deliver 750 new bed spaces every year up to 2030.
With the University of Manchester, Manchester Metropolitan University, and the University of Salford all contributing to the rising numbers of students in the city, the opportunity for investors is clear to see.
“The limited supply of new PBSA development in Manchester has captured the attention of investors, creating one of the most sought-after real estate markets in the UK,” said Tom Sinclair, CBRE’s head of residential investment in the North.
“Both developers and investors are actively monitoring new opportunities in the city as they look to secure new PBSA accommodation to meet the surging occupational demand.”
This is not just a Manchester phenomenon. Across the country, major university towns and cities are facing a shortage of more than 350,000 beds, as demand continues to outweigh both the supply and delivery of student accommodation.
“The UK’s student population is the largest it’s ever been, and undergraduate applications are forecast to grow by 25% to one million by 2030,” said Oliver Buckland, head of PBSA transactions at CBRE.
“There’s real opportunity across the country for landowners and developers and we have institutional funds actively seeking opportunities, that satisfy stricter, greener criteria.
He added: “This 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 will be a cost to investors who don’t act now as opportunities are scarce and demand is strong in both the rental and investor markets.”