Delivering modern student accommodation on campus when capital is scarce

By Simon Jones, our Group Higher Education Director

Most universities agree that student accommodation is about more than just providing a bed. Once peripheral to the academic mission, accommodation and the residential experience now play a fundamental role in recruitment, retention and student outcomes. 

The problem is that providing enough accommodation of the right quality, in the right location, and at a range of price points, is difficult when capital is scarce. What money is available often faces stiff competition from non-residential estates, and from priorities around investment in teaching learning and research. 

This is why so many universities have underinvested in their accommodation and are now facing into existing stock that no longer meets modern student expectations and a shortage of beds.    

Recent research we commissioned with Student First Group (SFG) found 61% of university-owned accommodation (c.200,000 beds) falls short of current student expectations. It’s an issue for universities up and down the country. 

The findings reveal that for different reasons, universities at the top and bottom of the league tables have tended to invest least in their residential estates. The ones at the bottom have more modest sources of capital and their students are generally more price-sensitive and less disposed to pay for newer, higher-quality PBSA.  

In contrast, higher ranking universities which are predominantly older, larger research-intensive institutions have better access to capital but face strong competition from other parts of the estate that are not directly income-producing but support student experience. For these leading universities, the driver to invest often only comes when accommodation approaches end-of-life, and the risk to student well-being and reputation becomes untenable.  

To rebuild or refurbish their ageing estates, SFG’s analysis suggests that universities collectively need around £13.8 billion. So how do they deliver high-quality, affordable accommodation at scale, without diverting critical capital away from teaching and research? 

Rising construction costs, regulatory complexity and competing capital demands, mean large-scale redevelopment is difficult for most universities to achieve using traditional models. It explains the recent shift away from self-funded accommodation towards partnerships, including joint ventures and DBFOs (Design Build Finance Operate).  

Partnerships offer universities the opportunity to unlock funding and preserve capital for projects that directly support growth and academic excellence. Analysis by SFG estimates that universities have around £25 billion locked up in their freehold residential estates. 

In Unite Students’ £390 million joint venture with Manchester Metropolitan University, the university contributed the value of its land and took a 30% equity stake in the partnership. This model enabled the university to unlock funding while retaining capital for other initiatives within its campus masterplan, such as its new library, a purpose-built, digitally enabled facility designed to support study, research and collaboration.  

Done well, partnerships enable institutions to access investment and design, planning and development expertise while retaining influence over key priorities such as rent setting and student experience. They provide opportunities to rethink design – leveraging the expertise of specialist providers to deliver accommodation that supports different budgets, fosters community and integrates seamlessly with university life. 

Crucially, this is not about treating accommodation as a commodity. It’s about embedding it within a broader strategy for student success. 

If we accept that belonging, connection and engagement are central to outcomes, then the environments in which students live become a core part of the educational model. They are where confidence is built, networks are formed and many of the skills that define graduate success are developed. 

The implications are clear. At a time when the value of higher education is being scrutinised, universities should be doubling down on the aspects of the experience that make the biggest difference. This requires a forward-thinking approach and an open mind to embrace the value of strategic partnerships. 

For students living away from home — reported to be around two thirds (69%) of UK 18-year-olds this year [1] — ensuring that they have access to high-quality, supportive residential communities is not just a “nice to have” – it’s a strategic priority. 

The institutions that recognise this, and act on it, will be best placed to thrive in the years ahead.