The vote to leave the EU, much like the Spanish Inquisition, was expected by no one – least of all by the Spaniards. Regardless, the Leave vote won out and this has led to a raft of predictions as to which industries will be most affected by Brexit.
The higher education sector spoke loudly in favour of Remain, arguing that leaving the EU would have huge ramifications for universities and students alike.
On 21st February, 103 Vice Chancellors of UK Universities signed an open letter to government ministers stating ‘While no-one is suggesting that UK universities could not survive outside the EU, leaving would mean cutting ourselves off from unique support and established networks and would undermine the UK’s position as a global leader in science, arts and innovation.’
Clearly, universities feel there will be negative consequences for leaving the EU, but will these effects be felt within the booming UK student accommodation market?
This article will argue they won’t. That’s because, whilst the universities will suffer due to a loss of research collaborations, possible restrictions on current EU staff’s right to remain in the UK and funding cuts, the student accommodation market will, in the words of Empiric Student Property (ESP) “remain resilient”.
1. The UK market does not rely on EU students
Currently, EU students receive the same deal as UK students meaning they ‘enjoy’ £9,000 per year tuition fees that are payable by the UK student loans system. Although nothing has been agreed, it looks likely that after Brexit, EU students could be expected to pay fees of between £12,000 – £36,000 per year.
Of course, it’s likely that this will put off EU students from studying in Britain. However, as UK fees and accommodation prices are substantially larger than on the continent – fees normally range between zero and €2,000 per year – many EU students already choose not to study here.
Currently, EU students only make up 6% of full-time students in the UK. So, whilst Brexit restrictions may lead to a reduction in EU student recruitment, the UK system is not dependent on them. In fact, UK university recruitment teams focus on attracting the more lucrative non-EU students from places such as China or India, which they do so successfully. So, with more non-EU students taking up places within UK universities every year, the loss of EU students won’t affect the need for more student accommodation.
2. Student numbers are growing within the UK
UK university applications rise year-on-year. In 2015 532,300 people began their studies at UK universities, which is an increase of 3.1% on the previous year. As well as growing numbers of UK applicants, there is also a great deal of foreign interest that looks unlikely to be diminished by the uncertainties of Brexit.
According to 2015 UCAS figures, for every place accepted by an EU student and a non-EU student, there were 7.3 and 7.9 applications from non-EU students, respectively. This suggests that even if there is a drop in EU students, there will be enough willing applicants to take their place.
These stats show that there is still enough growth for the investment market to flourish. The fact remains that first-year students in the UK currently lack access to purpose-built accommodation.
Where there is a market, there will be investment and the continued growth of UK university attendees. Mix that with the impressive global reputation of British universities, any shrink in student numbers will be too low to have an effect on accommodation demands.
3. Investors are undeterred
Movements in the student investment market suggest that major players do not deem Brexit a serious enough risk to pull out of the UK. These huge international investment conglomerates, with their army of forecast experts and experienced advisors, do not tend to chance their arm on dud investments. They know that in previous years, slumps in the economic climate have not resulted in student accommodation investment being anything other than the safe bet it has invariably been where ROI is concerned.
This point is demonstrated by recent big money deals such as Mapletree buying a huge £417m portfolio from Ardent/Mansion as well as Canadian investors Brookfield purchasing 13 different student accommodation developments for an estimated £432m.
It seems, in spite of Brexit, that the mantra amongst student accommodation investors is very much ‘business as usual’. This, for everyone invested in student accommodation, can only be a good sign.
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