Private developers signed a record 22 land deals for purpose-built student accommodation in 2024, totalling £473 million (AUD $910 million), according to a new report from real estate firm Knight Frank.
Notable transactions include Greystar’s acquisition of a former hotel now being transformed into the 1,014-bed One Medlock Street in Manchester, as well as Dominus and Cheyne Capital’s conversion of an office block at 65 Fleet Street in central London into student flats.
The Financial Times reports that over the past decade, privately developed student accommodation has reshaped city skylines across the UK, driven by rising rental demand and increasing student enrolments.
These properties often command higher rents than traditional student housing due to added amenities and modern facilities.
“The ongoing gap between supply and demand continues to support the sector, while affordability remains a key challenge for students,” said Katie O’Neill, associate at Knight Frank and lead author of the report.
Although international student numbers have dropped significantly in the past year following stricter visa policies implemented by the previous Conservative government, the student housing market remains highly lucrative due to high rental yields and the density of flats per development.
UK private rental prices rose by 9% in the year leading to December 2024, according to official data.
Research by the Higher Education Policy Institute in 2023 found that rents for private-sector student flats in 10 university cities were increasing at nearly twice the rate of university-owned housing.
A separate analysis of student housing costs found that the average annual student rent in London for 2024-25 reached £13,595 (AUD $26,170), surpassing the maximum student loan available for those studying in the capital for the first time.
Joe Lister, CEO of Unite Students, one of the sector’s largest developers, said that private investment plays a key role in addressing the student housing shortage.
Unite recently acquired a 444-bed site at Kings Place in Southwark, central London, as part of one of the 22 major deals last year.
The company is also exploring opportunities to purchase existing housing assets from universities.
“Universities own about £30 billion (AUD 57.7 billion) of real estate. We couldn’t do it in one go, but over 10 years there’s an opportunity to provide funding into the sector using our access to private capital,” Mr Lister said.
In addition to private land acquisitions, universities are increasingly partnering with developers to build new student housing.
These partnerships often provide cost advantages, as developers secure cheaper land and universities guarantee occupancy by directing students to these accommodations.
Last year, Newcastle University and Unite Students entered a £250 million (AUD $480 million) joint venture to develop around 750 new student beds for the university, further underscoring the sector’s growth despite financial pressures.
