The document summarizes the UK student accommodation market report for 2015/16. There was record investment activity in the student housing sector in 2015, with over £6 billion in transactions. Major portfolio sales were triggered by factors like profit-taking and portfolio reconstruction. International capital accounted for 82% of transactions, with new entrants from countries like the US, Australia, Canada, and Russia. Yield compression drove values to record highs, with prime yields in Central London falling to 4.5%. The private sector accounted for most growth in purpose-built student housing, with studio accommodations increasing 41% in one year.

1. UK STUDENT
ACCOMMODATION
REPORT
2015/16

2. 2
OVERVIEW
2015 will be a record year for
student residential investment
transactions.
We have witnessed a recovery in
student numbers since the tuition
fee increases of 2012/13. There
were 1.69 million full-time students
in the system in 2013/14, up by 1%
from 2012/13.
This has been the year of the
portfolio with sales triggered
by a range of factors including
distress, profit taking and portfolio
reconstruction.
Over 1,000,000 students are now
studying away from their home
region. This comprises almost half
of UK students in addition to EU
and international students who
continue to see the attraction of
a British university education.
Demand for purpose built student
accommodation (PBSA) is greater
than ever.
International capital accounted
for 82% of all transactions.
Liquidity in the sector has
increased driving prime yields in
Central London down to 4.50%.
The Universities and Colleges
Admissions Service (UCAS)
applications data signals that the
total number of students in the
Higher Education (HE) system
rose in 2014/15 and there are
positive signs for 2015/16 and
beyond.

3. 3
The removal of student number
controls is creating a polarisation
of UK universities. An arms race
has begun to capture market
share and is resulting in winners
and losers, with both positive and
negative consequences for PBSA.
There are now over 200 operators
in the market, with nearly two
thirds of private sector bed spaces
controlled by the Top 10 operators.
The Cushman & Wakefield UK
Student Accommodation Tracker
recorded over 539,200 PBSA
bed spaces in 2015, up 19,300
(4%) from the previous year. The
private sector has accounted
for the vast majority of this
growth, with the supply of studio
accommodation increasing by an
astonishing 41% in just one year.
Over the last 12 months, rental
growth in the sector has risen by
an average of 6% (4% when new
blocks for 2015 are excluded). But
this is not the full story as large
differentials exist between cities.
1.69mFULL-TIME STUDENTS
>539,000
>19,000
2.1:1 ratio
PBSA BED SPACES
BED SPACES ADDED IN
ONE ACADEMIC YEAR
OF ELIGIBLE STUDENTS PER BED
over 1m
116+
STUDENTS STUDYING
AWAY FROM HOME
HE INSTITUTIONS
More activity in the student
residential sector in 2015
than ever before.

4. 4
UNDERLYING STUDENT
DEMAND
Based on the most recent 2013/14 HESA data, there is very
positive evidence at undergraduate level that demand for HE
has recovered after a dip in student numbers in 2012/13, when
tuition fees of £9,000 were introduced at most universities.
However, growth in student numbers is weaker than the levels
experienced prior to the 2012/13 fee increase.
Full-time student numbers reached 1.69 million in 2013/14, up
by 1% from 2012/13 and exceeding 2010/11 numbers. Full-time
students constitute the core of the market and are the cohort
that continues to grow. Cushman & Wakefield’s understanding
is that this has been driven by students taking the decision to
go to university more seriously than ever before. Expectations
are rising, and the questions about what “value for money”
really looks like in the world of HE are coming to the fore.
TRENDS IN STUDENT NUMBERS AND APPLICATIONS
AT UK UNIVERSITIES
Looking at UCAS applications, demand for HE shows a positive
trajectory over recent years. Based on applications, Cushman
& Wakefield expect HESA to confirm that student numbers
have again risen for 2014/15 and beyond. UCAS applications
increased on average by 3% per year from 2012 to 2015 (based
on provisional figures for 2015 excluding students admitted
through clearing).
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
-
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
2,000,000
05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16
NumberofUCASapplications
NumberofstudentsatUKuniversitiesbystudymode
Full-time and sandwich students Part-time students Total UCAS applications
Source: HESA data 2005-2013, UCAS application data 2005-2014 and 2015 June deadline
TRENDS IN STUDENT NUMBERS AND APPLICATIONS
2005 - 2013

5. 5
TREND IN PBSA NUMBERS 2013-2015
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
2004/05 2013/14
22%
50%
UK outside region EU International
71%
EMPTY NESTS
Despite two tuition fee increases
within a time span of just six years,
full-time student numbers have not
been profoundly affected to date.
Interestingly and contrary to some
expectations, increases in the cost
of HE have resulted in more UK
students studying away from their
home region than ever before. In
2013/14, over 618,000 UK students
studied at a university outside
their domicile region, accounting
for 47% of all UK students and
reflecting an increase in numbers
of 22% on 2004 figures.
This appears to be a result of a
more direct decision to make a
return on investment in education
than ever before. Students are
choosing to go to universities with
better employability records and
credibility in order to maximise their
attractiveness in the labour market.
Equally, students are choosing
institutions more carefully in terms
of the student experience, so that
their time studying is enriching
and enjoyable. Crucially, part of
the investment in HE, alongside
choosing the best possible
university, now seems to extend
to choosing a quality residential
experience that will support their
academic and social experience.
Overall, students on full-time
courses studying outside their
home region counted 1,073,000
in 2013/14 including EU and
international students. Many UK
universities have been successful
in attracting increasing numbers
of EU and international students,
growing by 50% and over 70%
respectively from 2004/05 to
2013/14. This is very positive in
terms of demand for PBSA as
these student groups generally
constitute the core demand pool
for student accommodation.
Students are choosing a quality
residential experience that
will support their academic
and social experience.
TRENDS IN STUDENT DOMICILES 2004 -2013

6. 6
UNIVERSITY ARMS RACE
Universities are operating in an
increasingly competitive market.
With the shift in financial sources
towards tuition fee income and
away from public funding, student
recruitment has become an even
more important strategic focus
of university activity. With the
cessation of student number
controls in 2015, there are predicted
to be around 100,000 additional
university places by 2035. The
UCAS undergraduate entry system
has also been amended, with
students now able to “trade up”
and move within the entry system
with greater ease. This means that
university recruitment – a world
that used to be stable and quota
driven – is now becoming far less
predictable.
With students looking to get to the
best possible institution, and with
more choice than ever, successful
and fleet-of-foot universities
are able to fulfil their strategic
ambitions. However, this inevitably
means that some institutions will
be left behind. This has implications
for the universities themselves, but
also for those who invest in and
around them.
In this new world, the universities
who are likely to do best can
bring together a whole host of
positive attributes that can be
demonstrated to students – and to
shareholders.
The demands on universities are
greater than they have ever been.
The quality and modernity of their
academic and residential facilities,
and a definable distinctive
vision and ability to convert
and please their students are all
key in recruitment and securing
outcomes. This has led to huge
capital investment into academic
and residential facilities on campus.
In general, long term demand
for a highly qualified and skilled
workforce as well as demonstrably
better long term career outcomes
and earnings potential for
university graduates, will continue
to be main drivers of demand for
HE.
KEY QUESTIONS:
• How will the university “winners and losers” continue to pan out following the removal of student
number controls?
• UK universities have adopted similar strategies for growth. Is the continued targeting of international
and postgraduate students sustainable?
• Demand for postgraduate study appears to be in decline. Will new £10,000 postgraduate loans available from
2016/17 help strengthen demand?
• Can the UK continue to remain attractive in the global HE market with tuition fees being some of the most
expensive in the world? UK immigration policy will also have a significant bearing on this issue in the future.
• How will the new Green Paper, CSR and Nurse Review change the policy landscape?
• Will we see better take up of Higher Apprenticeships which have the potential to catalyse recruitment and
workplace training?

7. 7
The Cushman & Wakefield UK
Student Accommodation Tracker
records a peak of over 539,200
PBSA bed spaces in 2015 – up by
19,300 since 2014. The private
sector has grown by 10% between
2014 and 2015, with studio bed
spaces up 41% in just one year
(2014 -2015).
At a time when the HE sector has
been experiencing such seismic
changes, investors in student
accommodation have been
experiencing seismic changes of
their own.
Bed spaces in the private sector
grew by 28% from 2013 to 2015.
There has been significant
development of studio type rooms,
increasing by 41% in just one year
(2014-2015). Room numbers are
likely to continue to increase due
to the large pipeline of private
sector planning applications and
approvals across the sector, as well
as significant plans by universities
to invest in their accommodation
portfolios.
The Top 10 private operators in
terms of bed spaces account for
nearly two thirds of total bed
spaces (62%). Among these, Unite
is by far the largest player with
more than double the amount of
rooms than the closest competitor
Liberty Living (42,000 vs 19,000).
In total there are now more than
200 private operators active in the
market in 2015.
There are variations in the
number of rooms in each city
and city coverage according
to each company’s strategic
approach. CRM has only the fourth
largest portfolio but the widest
geographical reach being active in
26 markets. Being one of only two
main third party operators, CRM is
able to offer its services to a range
of investors with assets across
the UK.
SUPPLY OF PBSA
TREND IN PBSA NUMBERS 2013-2015
0
100,000
200,000
300,000
400,000
500,000
500,000
700,000
2013 2014 2015
Numberofrooms
28%
Private University
3%
Total
12%

8. 8
Due to the growing maturity
of the student accommodation
market, developers, operators
and investors are increasingly
considering niche markets both
in terms of location as well as
innovative product design such as
“twodios” and townhouses in order
to expand their businesses. Strong
branding and marketing are key in
ensuring that potential customers,
and their parents, are able to
access the offering. There is also a
huge amount of focus on improving
social spaces for example, private
dining rooms, cinema and games
rooms and spaces for private study.
Students are increasingly working,
interacting with social media, and
socialising with their friends and
flatmates simultaneously.
As some universities are reaping
the rewards of the removal of
student number controls, there
are some larger and seemingly
mature markets which are again
undersupplied, for example
Manchester
Rental growth in 2015 on
the previous year was 6% on
average across all purpose-built
accommodation available this
year. But this is not the full story as
large differentials have developed
between cities.
• The average rent of privately
supplied stock has increased
by 7%, whilst university
provided accommodation
increased by 3%.
• Average studio rents in the
private sector are up by 3%
while cluster flats have achieved
an average 6% increase.
The increases in the average price
of rooms has spiralled in certain
locations due to the development
of a large number of expensive
studios, especially in smaller or
relatively undersupplied markets.
But there have been losers too,
with some cities only experiencing
minimal single digit growth.
The occupational market will
take some time to absorb these
differentials as will the development
and investment market. There
is already some concern over
occupancy levels in some cities and
certain types of accommodation,
particularly studios.
0
5
10
15
20
25
30
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
UNITE Liberty
Living
Prodigy
Living
CRM Derwent
Living
Victoria
Hall
Mansion
Student
Sanctuary
Students
iQ Campus
Living
Villages
Numberofcities
Numberofrooms
TOP 10 PRIVATE SECTOR OPERATORS BY NUMBER
OF ROOMS 2015

9. 9
KEY
QUESTIONS:
• Will the continued pace of
development activity and
student affordability issues
result in lower occupancy
levels and an easing of rental
growth?
• Can we expect a cooling in
the volume of studios being
delivered?
• What is the next move for
Mansion?
• Will we see more third party
operating partners entering
the market?
• What will the fourth and fifth
generation PBSA assets look
like?
AVERAGE RENTS 2015 PRIVATE SECTOR
Edinburgh
Newcastle
Glasgow
Birmingham
London
Liverpool
Manchester
Sheffield
Nottingham
Leeds
Bristol
£129
£127
£147
£233
£149
£136
£122
£109
£108£119
£129
Private £144
London £233
The regions £123

10. 10
INVESTMENT MARKET
Investment activity in the UK student accommodation
sector has increased from an average of £250 million
per annum between 2005 and 2009 to around £2.7
billion in 2014. However, 2015 will be, by some distance,
a record year and investment transactions could reach
£6 billion.
PORTFOLIO SALES HAVE DOMINATED THE
MARKET IN 2015.
Major portfolio sales have been triggered by a range of
factors including investor redemption pressures, profit
taking and portfolio reconstruction. Those acquiring
have been new entrants looking to gain a foothold
in the UK market or increase critical mass and others
trying to reinvest new capital.
Thereareanumberofsignificantportfolioopportunities
that are still to transact including Dartmoor Capital’s
Ardent Portfolio and Avenue Capital’s Project Rose,
both of which are in excess of £400 million.
YIELD COMPRESSION HAS DRIVEN VALUES TO
RECORD HIGHS.
Although the break up and sale of Opal in 2013
has been totally eclipsed by the scale of the 2015
portfolio deals it will surely be remembered as the
catalyst which triggered the surge in international
capital committed to the sector. These disposals saw
the entrance of Avenue Capital (US), Campus Living
Villages (Australia) and notably Greystar Real Estate
(US), the largest net investor in recent years who have
increased their holdings in further portfolio acquisitions
during the year. Other significant new entrants to the
UK market during 2015 include Canada Pension Plan
Investment Board (CPPIB) and LetterOne Treasury
Services (Russia). International capital accounted for
a remarkable 82% of transactions in 2015.
Unsurprisingly yields since 2013 have hardened across
all types of opportunity by between 50 and 100 basis
points. Yields on portfolio transactions are difficult
to track and depend on the operating position. In
these cases there is continued evidence of a portfolio
premium, observed at greater than 10%, in addition to
the inherent value in retaining existing management
platforms.
INVESTORS SEEK TO MITIGATE LOWER YIELDS
AND IMPROVE RETURNS WITH A MOVE
TOWARDS DEVELOPMENT.
With competition for up and let stock driving yield
compression it is not surprising that interest in the
forward funding of development opportunities is also
increasing. McLaren sold its £83 million Union Portfolio
to LetterOne, comprising 839 bed spaces due for
completion in 2015 and 2016, with a second £175
million development portfolio currently being offered.
The yield gap between a completed scheme and the
equivalent development opportunity has been driven
to as little as 25 to 50 basis points but for schemes
with HEI support in the form of a lease or nomination
agreement, or those in the best locations, this
margin could disappear altogether. These are further
indications of the weight of money being directed to
this area of the sector.
HOWEVER, THE PACE OF DEVELOPMENT
ACTIVITY NEEDS TO BE CLOSELY MONITORED.
Cushman & Wakefield observe a national average
student to purpose built bed space (SBR) ratio of
2.1:1. It is with reference to this figure that we measure
whether a market is under or oversupplied. An SBR of
1.4:1 in Liverpool for example indicates an element of
oversupply, where the council are currently introducing
new measures to influence the quality and location
of PBSA following an inquiry over supply concerns.
Despite this, there are widespread reports of strong
occupancy levels in Liverpool. We believe low PBSA
pricing relative to traditional HMO markets has had a
bigger impact on student migration. At this stage, it is
therefore difficult to determine whether an SBR of 1.4:1
Direct Let Proposition
£20-50m Yields
Prime London (Zones 1&2) 4.50/5.00%
Prime London (Zones 3&4) 5.00/5.50%
Super Prime Regions 5.25/5.75%
Prime Regions 5.75/6.25%
Secondary 7.25/8.00%
Tertiary 8.00/10.0%

11. 11
represents real oversupply and also what represents
the market equilibrium. It is vital that the industry
continues to address what an appropriate SBR should
be, and this may be different depending on the town
or city in question and the micro-economic factors
therein.
THROUGHOUT 2015 THERE HAS ALSO BEEN
A CONSISTENT LEVEL OF SINGLE ASSET
TRANSACTIONS ALONGSIDE PORTFOLIO
ACTIVITY.
Institutional funds remain active and have eased
their requirements. From solely concentrating on
the security of university indexed-linked leases and
nomination agreements their appetite for direct let
assets has developed further in the last 12 months. This
has been most marked in the case of existing assets
although institutional forward funding of direct let
student accommodation continues to establish itself.
Annuity investors such as Legal & General, M&G
and Aviva Investors continue to pursue index linked
“income strip” opportunities, with the strongest yields
in the sector now around 4.00%.
International Owner/Operator UK Institutional Fund Property Company/
Private Equity
Developer
82% 10% 5% 2% 1%
2015 BY PURCHASER TYPE

12. 12
PROPERTY TOWN BED SPACES PRICE PURCHASER
Brandeaux / Liberty Living Portfolio UK 16,748 £1,100,000,000 Canada Pension Plan
Investment Board
(CPPIB)
The Nido Portfolio London 2,521 £600,000,000 Greystar Real Estate
Partners
Westbourne Portfolio UK 5,867 £540,000,000 Greystar Real Estate
Partners
Pure Student Living Portfolio London 2,150 £532,000,000 LetterOne Treasury
Services
Student Castle Portfolio UK 2,153 £330,000,000 CPPIB Liberty Living
Ahli United Bank Portfolio UK 2,100 £271,000,000 Unite UK Student
A c c o m m o d a t i o n
Fund (USAF)
Assam Place London 346 £110,000,000 Greystar Real Estate
Partners
Paul Street London 456 £108,600,000 Apache Capital
Union Portfolio UK 839 £83,000,000 LetterOne Treasury
Services
ISL London 347 £70,000,000 Round Hill Capital

13. 13
KEY QUESTIONS:
• Can investment volumes continue to increase year on year?
• Are we likely to experience much more yield compression?
• What impact will the Scottish Private Housing (Tenancies) Bill and continued political uncertainty have
on yields in Scotland?
• Does secondary stock now represent the best option for investors targeting capital growth?
2015: A YEAR IN NUMBERS
INVESTMENT
TRANSACTIONS
TO DATE WHICH COULD RISE TO
£6.0 BILLION
OF TOTAL PRIVATE SECTOR SUPPLY HAS
TRADED TO DATE AND THIS COULD REACH
ALMOST 30%
c43k
20%+
c£4.5bn
BEDS TRANSACTED TO DATE WITH
C15,000 BEDS YET TO TRANSACT
OF TRANSACTIONS
TO DATE WERE
PORTFOLIOS
AVERAGE
LOT SIZE
AVERAGE LOT
SIZE FOR
SINGLE ASSET
TRANSACTIONS
82%
£105m
£21m
TOP TEN DEALS BY LOT SIZE

14. 14
Construction costs are expected
to continue their upward
trajectory. The BCIS all-in
tender price index forecasts a
4.9% increase in 2016 which is
dominated by labour cost inflation,
although materials costs are
also set to rebound following
a reprieve in 2015.
INVESTMENT OUTLOOK
2015 has been a ground breaking year for the UK student accommodation sector. The sector is
thriving, with liquidity driving investment volumes higher than ever before. Investors are attracted
to sound market fundamentals with buoyant student demand and the restricted supply of PBSA
resulting in real rental growth in addition to yield compression. As a property asset class, student
accommodation has become even more aligned with the mainstream sectors. Can we expect
more of the same? Our key predictions for 2016 are as follows:
Similar levels of liquidity can
be expected, although overall
investment volumes may not
reach the 2015 peak. There are a
number of “virgin” investors that
have missed out on portfolios
this year that are still seeking
investment opportunities in PBSA.
We await the conclusion of the
sale of the Ardent Portfolio and
Project Rose, both of which
are in excess of £400 million.
We’d expect to see at least one
new investor entrant to the UK
market in 2016.
Expect the university arms race to
continue with heavy expenditure
on infrastructure and marketing,
unconditional offers and other
incentives being used to gain more
market share. Success and failure is
likely to become starker with both
positive and negative consequences
for PBSA across the UK.
Secondary PBSA now offers a large
yield discount to prime. As part of
the sector’s natural evolution, we
expect investors with higher costs
of capital, such as opportunity
funds and private equity to backfill
this space. This is likely to lead
to yield compression and there
remains a huge opportunity to
address the growing affordability
agenda through an appropriate
operating platform and
savvy branding.
We expect increased investor
appetite for large portfolios
of development funding
opportunities. This will enable
access to scalable platforms and
enhanced returns to compensate
for development risk. We are
aware of a number of emerging
examples that are likely to
transact in 2016.
The outlook for yields in Scotland
however is less optimistic, with
the proposed introduction of
the Scottish Private Housing
(Tenancies) Bill and continued
political uncertainty causing
concern for investors in PBSA.
London remains undersupplied
with PBSA but expect to
see activity concentrated in
emerging clusters within Zones
3 and 4 as development in more
central locations continues to
remain unviable.

15. 15
Stability in yields with limited
if any compression in Central
London, where yields appear to
offer “fair value” relative to other
mainstream sectors. Scope for
yield compression still exists in
Outer London and regionally in
England and Wales, supported
by more liquidity relative to lower
levels of available investable stock
and the continuing low interest
rate environment.
Supply is expected to continue
to grow. 2015 saw an additional
20,000 bed spaces being
delivered into the UK market and
there is no reason to suggest this
won’t be repeated. Developers
need to be aware of approaching
market equilibriums, the pace of
erosion of traditional HMO stock
and any warning signs in reduced
occupancy levels.
Based on UCAS applications,
Cushman & Wakefield expect
the Higher Education Statistics
Agency (HESA) to confirm that
student numbers have again
risen for 2014/15 and beyond.
With no let-up in the trend of
students studying outside their
home region and in particular
EU and international students
continuing to see the attractions
of a British university education,
the implications for PBSA
remain positive.
At a headline level, rental growth
is expected to continue driven
by demand and underlying cost
inflation factors. Above average
growth is likely to be experienced
in under developed markets or
where planning regimes remain
difficult. We can also expect
defensive pricing strategies in
markets containing universities
that are losing market share as a
result of the removal of student
number controls or where existing
supply and development pipelines
are high. Affordability will continue
to be a strong theme within
student satisfaction.
We expect to see fourth
and fifth generation student
accommodation schemes during
2016 as developers seek to
differentiate in more saturated
markets. This extends to new
concepts offering more flexibility
and efficiency in response to rising
land values and alternative uses
such as PRS, as well as bigger and
better social spaces for students
to interact.

16. CONTACT DETAILS
ADVISORY
Sarah Jones
Director
+44 (0)161 235 7650
sarah.e.jones@cushwake.com
David Feeney
Senior Consultant
+44 (0)161 235 7658
david.feeney@cushwake.com
Josaphine Ford
Consultant
+44 (0)161 455 3777
josaphine.ford@cushwake.com
Daniela Sperber
Consultant
+44 (0)161 235 7651
daniela.sperber@cushwake.com
TRANSACTIONS
Mike Mitchell
Senior Director
+44 (0)161 455 3797
mike.mitchell@cushwake.com
Simon Lowe
Associate Director
+44 (0)161 455 3745
simon.lowe@cushwake.com
Sophie Magee
Senior Surveyor
+44 (0)161 455 3778
sophie.magee@cushwake.com
VALUATION
Derek Nesbitt
Director
+44 (0)161 455 3790
derek.nesbitt@cushwake.com
Jonathan Goode
Senior Director
+44 (0)20 3296 4522
jonathan.goode@cushwake.com
James Lockwood
Associate Director
+44 (0)161 455 3709
james.lockwood@cushwake.com
Ben Nicholson
Director
+44 (0)20 3296 4470
ben.nicholson@cushwake.com
Jagruti Joshi
Associate
+44 (0)20 7152 5769
jagruti.joshi@cushwake.com
Howard Ounsley
Senior Director
+44 (0)131 222 4550
howard.ounsley@cushwake.com
Copyright © 2015 Cushman & Wakefield. All rights reserved. CUS100054 11/15
About Cushman & Wakefield
Cushman & Wakefield is a global leader in commercial real estate services, helping clients transform
the way people work, shop, and live. The firm’s 43,000 employees in more than 60 countries provide
deep local and global insights that create significant value for occupiers and investors around the
world. Cushman & Wakefield is among the largest commercial real estate services firms in the world
with revenues of $5 billion across core services of agency leasing, asset services, capital markets,
facilities services (branded C&W Services), global occupier services, investment management
(branded DTZ Investors), tenant representation and valuations & advisory. To learn more, visit
www.cushmanwakefield.com or follow @Cushwake on Twitter.