Students enter mainstream

Glaswegian homeowners are struggling to sell their properties in a market still mired in recession mentality. According to latest data from the Registers of Scotland, residential property sales have dipped to the lowest volume since records began in 2003, and amount to less than half of the number of properties sold in Scotland during the market peak of 2007-2008.

Prices keep falling: following a further dip of 2.3 per cent, the average cost of a residential property is £159,310 (HK$1.991 million). While Glasgow had the most sales, nudging ahead of Edinburgh, average values there dropped 5.1 per cent.

Student housing is one area of unmet demand. For a university town renowned for its tertiary, further education and special education institutions, Glasgow, home to Britain's second-largest student population, has a shortage of beds.

According to Jones Lang LaSalle, Glasgow's four main university residences have only 6,531 bedrooms for more than 50,000 full-time students. With private sector operators providing an additional 4,174 beds, just 8.3 per cent of total student numbers, the Jones Lang LaSalle report deduces that 78.7 per cent of students in Glasgow must find accommodation elsewhere - either in shared houses, or for local students, at home with parents. The upcoming pipeline will do little to ease the shortfall, the report says.

Savills research confirms that policy changes and financial cuts within higher education will mean that the best universities in Scotland, Wales and Northern Ireland are likely to face a severe shortage of purpose-built student accommodation, while continuing to grow. Peter Allen, head of Savills development in Scotland, says: "Scotland has a real ongoing supply/demand imbalance. Edinburgh and Glasgow universities are still hitting the top 10 for investors in British student accommodation, and Aberdeen remains a popular choice, albeit narrower in its appeal because of its specialisations."

Student accommodation is gaining investor credibility. JLL says the market is emerging as "a significant mainstream global investment category", attracting more than US$3 billion in Britain this year - more than double the 2011 level - and US$2 billion in the United States. "Although sometimes described as an 'alternative' investment sector, in these markets student housing is increasingly sought after by mainstream institutional investors," the Jones Lang LaSalle report finds.