The average rent in the UK went up by 4.4% to £1017 per month for a single studio and up by 3.1% across the rest of Europe, according to a new report by BONARD.
Analysts said that rising inflation and the energy crisis are driving increases in rent, but that high demand has meant that occupancy rates remain high, despite the economic downturn.
“From an occupancy perspective, from a rent perspective, we’re doing very well,” said Josh Miller, managing director at investment management firm Harrison Street. “It’s been one of the best years, frankly, since we’ve been in business in Europe and I think we’re seeing a lot of the same trends in the US as well.”
“Supply is not growing as fast as demand”
Students struggled to secure housing in countries including the UK, Ireland, Canada, Australia and the Netherlands, with some universities warning overseas students not to travel if they haven’t found somewhere to live.
“Supply is not growing as fast as demand,” warned BONARD CEO Samuel Vetrak, as rising costs and high interest rates slow down new developments in some countries.
Between 2018 and 2021, approximately 50,000 new beds per year were delivered globally on average (excluding the US), rising to 75,000 in 2022. Although 77,000 beds are in the pipeline for 2023, only about 38,000 beds are expected to be delivered in 2024.
Porto, Barcelona and Seville have the biggest construction pipelines, while London and Paris have the most projects under construction.
High building costs and planning difficulties in some markets are a challenge for developers, according to Miller. “The supply and demand imbalance is probably going to continue to be exacerbated over the next couple of academic years,” he said.
Occupancy rates are expected to remain high, with China’s ban on overseas online study likely to drive further demand.
BONARD said that the market uncertainty that had arisen during the pandemic has been replaced by economic downturn, but predicted that this uncertainty may calm in the first quarter of 2023.
Analysts identified new trends in student accommodation, including offering amenities such as gyms, games rooms and study spaces. Student housing opened in the last three years has also tended to include bike storage and outdoor areas, while computer rooms and libraries have been replaced with high-speed internet.
“If you increase rents, you also increase expectations,” said Marc Sampietro, living operations director at aparto. “That’s why it’s important to offer a package of services… students will ask for more. That’s our key message when we are talking about rents: what other services are we going to include?”